5.0 Unit 5 Exam

By reinvesting your earnings to gain additional returns

By reducing the risk of investing

By investing in different assets to diversify your portfolio

By increasing the impact of inflation over time

The value has gone up and down a lot, but overall has increased over time

The value has increased constantly and slowly since the stock market opened

The value increased a lot in its early days, but has since stayed relatively constant

The value has gone up and down a lot, but overall has decreased over time

One-day returns are far too short a time frame to make any assessment about past or future performance of Super Duper

Historically, Super Duper must have been much more successful or their shares wouldn’t even be eligible to trade on the stock market

Super Duper has likely been struggling financially for months or even years

Share prices for Super Duper fluctuate regularly and and only high risk investors should have this company anywhere in their portfolio

Make frequent trades and withdraw your short-term earnings

Start to invest early for the long-term

Reinvest earnings

Use diversification and allocation to minimize risk

Bonds typically have higher returns and lower risk than stocks

Bonds typically have lower returns and lower risk than stocks

Bonds typically have higher returns and higher risk than stocks

Bonds typically have lower returns and higher risk than stocks

There is little to no risk to investing in the stock market

It is easy to make money by timing the market to buy/sell stocks

t is better to wait until retirement age to begin investing in the stock market

The whole stock market value can go up even if some stock values go down

The number of shares other investors have purchased over that same time frame

The price per share for each of her investments today

The total returns of the US stock market over that same time frame

The federal interest rate, minus inflation since the day she purchased the shares

Investing in different assets to spread out the risk to different markets

Using a variety of sources to do research on what stocks to buy

Making sure that your investments are different from those of your friends and family

Never buying the same stock more than once

A dividend is the difference between the purchase price and selling price of a stock

A dividend is a payment a company makes periodically to owners of its stock

A dividend is a payment you make to keep a stock on loan from a company

A dividend is the tax you pay in order to buy and sell stocks

It can help you grow your money through the power of compounding

It involves little risk because your returns are insured up to $250,000

It guarantees a high rate of return over a short period of time

It is meant for short-term needs like your emergency fund, not saving for retirement

Price: the cost of the bond if you were to purchase it in the market at that moment

Maturity: The recommended age a buyer should be when they purchase a given bond

Coupon Rate: the annual interest rate paid to the holder of the bond

Face Value: the value of the bond that will be paid out at the end of the bond’s life

His purchasing power will INCREASE because the interest rate is higher than the historical rate of inflation

His purchasing power will INCREASE because the interest will compound faster than the historical rate of inflation

His purchasing power will DECREASE because the interest rate is lower than the historical rate of inflation

His purchasing power will remain the SAME because the interest rate is the same as the historical rate of inflation

=E2/142*100

=(F6-F2)*100

=D2*E2/F2

=F2/F$6*100

The value of bonds goes up and down all the time like a see-saw

When you buy bonds, their value decreases, and it increases when you sell them

If you buy more bonds, then you have to buy fewer stocks and vice versa

When interest rates rise, the value of bonds falls and vice versa

50

1.05

0.05

2.5

$600

$1,200

$2,400

$3,600

y = 10000(1.09)^15

y = 10000(0.09)^15

10000 = x(1.09)^15

10000 = x(0.09)^15

$196,320.00

$166,743.72

$212,680.00

$248,805.52

0.35%

3.5%

35%

350%

A

B

C

D