2. Category 5 Category 4 Category 3 Category 2 Category 1 50 40 30 20 10 20 30 40 50 10 20 30 40 50 10 20 30 40 50 10 20 30 40 50

3. What is the difference in Traditional IRA & Roth IRA? How it is taxed. Roth IRAs grow tax free

4. What is an advantage of investing with help of a full service brokerage company? Can help with complex issues when investing, such as tax situation, etc. They also have analysts working behind the scenes reviewing the data.

5. Define stock: Share of ownership in a company

6. What is compound interest? When your previous earned interest can earn interest

7. Why does the average investor invest in mutual funds? Diversification is built into this type of investment

8. What is the general relationship between risk & reward? The higher the risk, the greater the reward

9. Define Capital gains: Gain made from investments. Taxed as unearned income

10. What does rollover mean in the investment world? The average American changes employment 7 times in their lifetime – a rollover allows them to move investments by following the outlined rules and avoid tax consequences

11. What are market indicators? Dow, S&P 500 and Nasdaq

12. What are round & odd stock purchases? The number of stocks purchased. A round lot means in lots of 100 (i.e. 200, 300, etc.) Odd lots are 102, 104, 201, etc.

13. What are the three most important criteria to consider when investing? Risk, Rate of Return and Liquidity

14. What is the risk pyramid? Shares information regarding the measure of risk for an investment

15. How are the prices for stocks & bonds determined? Supply and demand

16. Liquidity is most difficult in which type of investment? Real Estate

17. What is an IPO and who can purchase it? Initial public offering – Investment Bankers

18. Why should you start to invest when you are young? To benefit from compounding. You can never get back time!

19. What is a nominal rate of return? A nominal rate of return does not take all cost into consideration. A real rate of return gives a more accurate reflection.

20. Explain the purpose of 529, 401(k) and 403(b) 529 - Saving for higher education 401(k) – offered by private companies as a way to save for retirement (typically has a match) 403(b) – way for individuals working for non-profits to save for retirement (typically does not have a match)

21. Explain bear market: Does not have consumers’ confidence and investors tend to not invest

22. What is the difference in corporate and government/municipal bonds? The tax situation

23. What are blue chip stocks? Stocks in large, nationally known companies, that have been around for a long time. i.e. McDonalds, Coke, etc.

24. What is the relationship between risk & diversification? Diversification lowers risk. One of the main reasons most Americans invest in mutual funds is because diversification is built into them

25. What is inflation risk? What is market risk? Inflation risk - The risk that an investment will not keep up with inflation. Market risk – a guarantee that you will make money

26. Explain bull market: Has consumers’ confidence and consumers tend to invest in this type of market

27. What is principal? Original amount of money invested