<p>CHAPTER 7: Investment Options: Risks and Rewards</p><p>SECTION 1: Stocks, Bonds, and Mutual Funds</p><p>1. A stock is an investment in the ownership of what type of business?</p><p>2. What are dividends?</p><p>3. What is the difference between capital gain and capital loss?</p><p>4. What are the two basic types of stock?</p><p>5. What are the three major stock markets in the United States?</p><p>6. Which of these three stock markets is the world’s largest in terms of dollar volume?</p><p>7. What does the abbreviation “Net Chg” in the newspaper stock listings mean?</p><p>8. What are three examples of blue-chip stocks?</p><p>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?</p><p>11. What does it mean to be a Fortune 500 company?</p><p>12. How are futures and options similar? How do they differ?</p><p>13. What are penny stocks, and why are they considered risky?</p><p>14. What type of bond is often tax-exempt?</p><p>15. How long does it take most Series EE bonds to mature?</p><p>16. How does a mutual fund make it easier for investors to diversify?</p><p>17. What are four guidelines to help determine whether a mutual fund is socially responsible?</p><p>18. What is the difference between load and no-load mutual funds?</p><p>19. What type of mutual fund pays out interest in the form of regular dividends?</p><p>20. What does the time value of money assume about an investor? SECTION 2: Other Types of Investments</p><p>1. Rental properties are considered what kind of investment?</p><p>2. What are some examples of collectibles?</p><p>3. Why is it difficult to assign value to collectibles?</p><p>4. What is one of the main reasons people save and invest money?</p><p>5. What is an estate, in legal terms?</p><p>6. What types of information are included in an estate plan?</p><p>7. Your estate plan and any other last wishes are spelled out in what signed and notarized document?</p><p>8. How old are most people before they start saving for retirement?</p><p>9. What is the “Ballpark E$timate,” and how can it help you plan for retirement?</p><p>10. What types of benefits does Social Security provide? 11. When you retire, where will your Social Security benefits come from?</p><p>12. When the government collects more in FICA taxes than it pays out in benefits, what happens to the leftover money?</p><p>13. What are five types of company-sponsored retirement plans?</p><p>14. What does it mean to be vested in a company?</p><p>15. Who provides the funding for profit-sharing programs?</p><p>16. How does a tax-deferred plan, such as a 401(k) plan, benefit the employee?</p><p>17. What retirement plan covers employees of tax-exempt organizations like public schools?</p><p>18. How does the opt-out provision affect involvement in 401(k) plans?</p><p>19. What is the most common form of personal retirement plan?</p><p>20. How does a Roth IRA differ from a traditional IRA? SECTION 3: Advice, Information, and Transactions</p><p>1. What is a broker?</p><p>2. What type of broker works mainly with investors who need very little advice?</p><p>3. What are four examples of popular brokerage firms?</p><p>4. A financial advisor bases his or her advice on what factors of a client’s life?</p><p>5. What things should you consider about potential candidates when choosing a financial advisor?</p><p>6. What are the names of three print publications that provide financial information and investment analysis?</p><p>7. Publicly traded companies publish four quarterly reports and an annual report containing what?</p><p>8. What are three of the most popular Web sites that provide information to investors?</p><p>9. Which investment Web site provides stock market information along with humor?</p><p>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? </p><p>12. What kind of mutual fund account will you likely have if you are a minor?</p><p>13. Once you choose a mutual fund, who makes all the decisions regarding that fund?</p><p>14. Where is a good place to invest your money if you want a hands-on approach?</p><p>15. What do you need to be careful about when buying and selling stocks online?</p><p>16. What is one way you can try your hand at stock trading even if you’re not ready to invest?</p><p>17. What is virtual investment?</p><p>18. What are three virtual investment Web sites?</p><p>19. Why should you keep track of local, national, world, and economic news when deciding what stocks to purchase?</p><p>20. What two things should you keep in mind in all your transactions? </p>
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