CHAPTER 1: Principles of Government and Politics s1

CHAPTER 7: Investment Options: Risks and Rewards

SECTION 1: Stocks, Bonds, and Mutual Funds

1. A stock is an investment in the ownership of what type of business?

2. What are dividends?

3. What is the difference between capital gain and capital loss?

4. What are the two basic types of stock?

5. What are the three major stock markets in the United States?

6. Which of these three stock markets is the world’s largest in terms of dollar volume?

7. What does the abbreviation “Net Chg” in the newspaper stock listings mean?

8. What are three examples of blue-chip stocks?

9. What is the Dow, and how is it related to blue-chip stocks? 10. What is the difference between a bull market and a bear market?

11. What does it mean to be a Fortune 500 company?

12. How are futures and options similar? How do they differ?

13. What are penny stocks, and why are they considered risky?

14. What type of bond is often tax-exempt?

15. How long does it take most Series EE bonds to mature?

16. How does a mutual fund make it easier for investors to diversify?

17. What are four guidelines to help determine whether a mutual fund is socially responsible?

18. What is the difference between load and no-load mutual funds?

19. What type of mutual fund pays out interest in the form of regular dividends?

20. What does the time value of money assume about an investor? SECTION 2: Other Types of Investments

1. Rental properties are considered what kind of investment?

2. What are some examples of collectibles?

3. Why is it difficult to assign value to collectibles?

4. What is one of the main reasons people save and invest money?

5. What is an estate, in legal terms?

6. What types of information are included in an estate plan?

7. Your estate plan and any other last wishes are spelled out in what signed and notarized document?

8. How old are most people before they start saving for retirement?

9. What is the “Ballpark E$timate,” and how can it help you plan for retirement?

10. What types of benefits does Social Security provide? 11. When you retire, where will your Social Security benefits come from?

12. When the government collects more in FICA taxes than it pays out in benefits, what happens to the leftover money?

13. What are five types of company-sponsored retirement plans?

14. What does it mean to be vested in a company?

15. Who provides the funding for profit-sharing programs?

16. How does a tax-deferred plan, such as a 401(k) plan, benefit the employee?

17. What retirement plan covers employees of tax-exempt organizations like public schools?

18. How does the opt-out provision affect involvement in 401(k) plans?

19. What is the most common form of personal retirement plan?

20. How does a Roth IRA differ from a traditional IRA? SECTION 3: Advice, Information, and Transactions

1. What is a broker?

2. What type of broker works mainly with investors who need very little advice?

3. What are four examples of popular brokerage firms?

4. A financial advisor bases his or her advice on what factors of a client’s life?

5. What things should you consider about potential candidates when choosing a financial advisor?

6. What are the names of three print publications that provide financial information and investment analysis?

7. Publicly traded companies publish four quarterly reports and an annual report containing what?

8. What are three of the most popular Web sites that provide information to investors?

9. Which investment Web site provides stock market information along with humor?

10. What is the minimum dollar amount you need to make a good initial investment in stocks or mutual funds? 11. Why are younger people more likely to take investment risks than older people?

12. What kind of mutual fund account will you likely have if you are a minor?

13. Once you choose a mutual fund, who makes all the decisions regarding that fund?

14. Where is a good place to invest your money if you want a hands-on approach?

15. What do you need to be careful about when buying and selling stocks online?

16. What is one way you can try your hand at stock trading even if you’re not ready to invest?

17. What is virtual investment?

18. What are three virtual investment Web sites?

19. Why should you keep track of local, national, world, and economic news when deciding what stocks to purchase?

20. What two things should you keep in mind in all your transactions?