Study Questions Essay

679 WordsNov 20, 20143 Pages
Lesson 1 (3.0 points) What is a money market account? (0.5 points) Money market accounts are a type of checking accounting, but the money is actually placed into investments--- so that on your monthly or quarterly bank statement you receive a small amount of return on the investment. What is a liquidation policy? (0.5 points) When a business or firm is terminated or bankrupt its assets are sold and the proceeds pay creditors What is simple interest? (0.5 points) Simple interest is money you can earn by initially investing some money. A percentage of the principal is added to the principal, making your initial investment grow What is compound interest? (0.5 points) Compound interest is interest added to the principal of a deposit or loan so that the added interest also earns interest from then on. What is the time value of money? (0.5 points) The idea that money available at the present time is worth more than the same amount in the future due to its potential earning capacity. Name a strategy for saving money. (0.5 points) Pay yourself first. To make any headway in saving money, you need to make saving a priority. Most people pay their bills and use the leftover money for savings. Instead, treat savings like another bill. Pay yourself before you pay others Lesson 2 (3.0 points) What is investing? (0.5 points) expending money with the expectation of achieving a profit by putting it into financial schemes, shares, or property What is financial risk? (0.5 points) Risk is a term often used to imply downside risk, meaning the uncertainty of a return and the potential for financial loss What is diversification? (0.5 points) In finance, diversification means reducing non-systematic risk by investing in a variety of assets. What is risk tolerance? (0.5 points) Risk tolerance is an

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