Personal Finance Study 3

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Lesson 1 (3.0 points) 1. What is a money market account? (0.5 points) Invests your money in low risk investments with predictable interest rates. 2. What is a liquidation policy? (0.5 points) Tells you when and how you’re able to remove money 3. What is simple interest? (0.5 points) Interest gained only on principle amount of an account. 4. What is compound interest? (0.5 points) Interest added to principle account 5. What is the time value of money? (0.5 points) The assumption that money is worth more the sooner it is received. 6. Name a strategy for saving money. (0.5 points) Spending wisely is a strategy for saving money. Lesson 2 (3.0 points) 1. What is investing? (0.5 points) When you give your money, time, or energy to something in order to get a reward in the future; usually a financial reward. 2. What is financial risk? (0.5 points) The possibility of losing money. 3. What is diversification? (0.5 points) An investment strategy in which you spread out your investments among many different types. 4. What is risk tolerance? (0.5 points) The amount of risk you are able to handle without being to negatively affected by failed investments. 5. What are debt investments? (0.5 points) Investments without ownership that promise a specific return on the investment. 6. What are equity investments? (0.5 points) Investments in the ownership of something, such as a company or real estate, with the hope that the investment will increase in value and be worth more at some future date. Lesson 3 (3.0 points) 1. What are stocks? (0.5 points) A popular type of equity investment in which you can buy partial ownership of company in a tiny fractional amount. 2. What are bonds? (0.5 points) A type of debt investment in where you lend money to a company or government. 3. What is fraud? (0.5 points) Illegal, dishonest behavior by an

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