2.3/2.4 Stocks and Bonds

1. According to the video script's analogy, what is learning about investing compared to?

A.Learning to cook a meal

B.Learning to ride a bike

C.Learning a new language

D.Learning to play chess

2. What is a 'stock' defined as in the video script?

A.A certificate proving a company's debt

B.Partial ownership of a company

C.A large sum of money a company holds

D.A type of loan a company takes out

3. According to the script, which of the following is NOT a way an investor can make money by investing in stock?

A.By receiving a set interest rate on the initial investment

B.Through stock appreciation

C.By selling the stock to another investor at a higher price

D.Through a periodic dividend payment

4. What is a dividend?

A.The initial cost of a stock at its IPO

B.Money a company gives back to investors when it sells off its assets

C.A periodic payment issued by a company from its earnings

D.A fee an investor pays to a stockbroker

5. What is the process of a company issuing shares of stock to raise money called?

A.Going public

B.Reinvesting earnings

C.Taking on a loan

D.A stock split

6. If a company wants to raise $1,000,000 and decides to issue 1,000 shares of stock at its IPO, what is the initial value of each share?

A.$100

B.$1,000

C.$10

D.$10,000

7. What is the basic goal of investing in the stock market, according to the video?

A.To always buy at the IPO and hold the stock forever

B.To buy high and sell low

C.To invest only in companies that make bikes

D.To buy when prices are low and sell when prices are high

8. Why are stocks considered riskier than other investments like bonds or CDs, according to the script?

A.Because they are difficult to buy and sell without a stockbroker

B.Because their prices can change quickly, going up, down, or staying the same

C.Because they do not offer any dividends

D.Because they always lose money in the long run

9. What is one way 'savvy investors' can try to minimize risk, according to the video?

A.By buying and selling all stocks in the same day

B.By adding diversity to their portfolios by investing in a variety of companies

C.By only investing in a single, high-growth company

D.By not putting any money in other investments besides stocks

10. Why do investors keep coming back to the stock market despite the increased risk?

A.Because with increased risk comes the potential for greater returns

B.Because it guarantees a spot in the Tour de France

C.Because the companies always do well and their stock prices always go up

D.Because it is historically safer than bonds or CDs

1. How does an investor make money from an individual bond?
a) By selling shares in a fund
b) By receiving regular interest payments
c) By collecting stock dividends
d) By buying bonds below face value

2. What is one way investors make money from bond funds?
a) Through stock price increases
b) Through interest payments from one bond
c) Through dividends paid by the fund
d) Through guaranteed repayment of principal

3. Which of the following is a main advantage of individual bonds?
a) Diversification
b) Principal is returned to the investor at maturity
c) Cheaper than bond funds
d) Payments vary over time

4. What is a key advantage of bond funds compared to individual bonds?
a) They are less diversified
b) They guarantee repayment of principal
c) They are cheaper and provide diversification
d) They pay higher interest than bonds

5. What is a common disadvantage of owning individual bonds?
a) They are too diversified
b) They can be expensive since you must buy the whole bond
c) Their payments are inconsistent
d) The principal is not returned

6. What is a main disadvantage of bond funds?
a) Less consistent payments and no return of the principal investment
b) Too safe for investors
c) Higher costs than buying individual bonds
d) Guaranteed losses when sold