Study Questions for Section 4 Essay

579 WordsOct 16, 20143 Pages
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 from the account. 3. What is simple interest? (0.5 points) is interest gained only on the principal amount of an account. 4. What is compound interest? (0.5 points) is interest that is added to the principal in the account, so that the interest you receive starts to generate its own interest 5. What is the time value of money? (0.5 points) is the assumption that money is worth more the sooner it is received. 6. Name a strategy for saving money. (0.5 points) Collect Coins Lesson 2 (3.0 points) 1. What is investing? (0.5 points) is when you give your money, time, or energy to something in order to get a reward in the future 2. What is financial risk? (0.5 points) is the possibility of losing money. 3. What is diversification? (0.5 points) is an investment strategy in which you spread out your investments among many different types. 4. What is risk tolerance? (0.5 points) is the amount of risk you are able to handle without being too negatively affected by failed investments. 5. What are debt investments? (0.5 points) are investments without ownership that promise a specific return on the investment. 6. What are equity investments? (0.5 points) are 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) are a popular type of equity investment in which you can buy partial ownership of a company in a tiny fractional amount 2. What are bonds? (0.5 points) Bonds are a type of debt investment in which

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