Section 4 Study Questions (12.0 Points)

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Section 4 Study Questions (12.0 points) Answer each question fully. Complete sentences are not necessary. Lesson 1 (3.0 points) What is a money market account? (0.5 points) A money market is a common type of account offered by banks that is used just as a savings account it. In a money market account you invest your money in low risk investments with predictable interest rates. What is a liquidation policy? (0.5 points) A liquidation policy tells you when and how you’re able to remove money from the account. What is simple interest? (0.5 points) Simple interest is gained only on the principal amount of an account. What is compound interest? (0.5 points) Compound interest is interest that is added to the principal in the account, so that the interest you receive starts to generate its own interest. What is the time value of money? (0.5 points) The time value of money is the assumption that money is worth more the sooner it is received. Name a strategy for saving money. (0.5 points) A money market Lesson 2 (3.0 points) What is investing? (0.5 points) Investing is when you give your money, time, or energy to something in order to get a reward in the future--usually a financial reward. What is financial risk? (0.5 points) Financial risk is the possibility of losing money. What is diversification? (0.5 points) Diversification is an investment strategy in which you spread out your investments among many different types. What is risk tolerance? (0.5 points) Risk tolerance is the amount of risk you are able to handle without being too negatively affected by failed investments. What are debt investments? (0.5 points) Debt investments are investments without ownership that promise a specific return on the investment. What are equity investments? (0.5 points) Equity investments are investments in the ownership of

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