Personal Financial Literacy Module 4 DBA exam 2023 with 100% correct answers
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Course
Personal Financial
Institution
Personal Financial
Personal Financial Literacy Module 4 DBA
Bonds - ANSWER--Purchasing a bond means giving a loan to a company
-Requires a minimum amount of money to purchase and a minimum length of time to hold on to the bond
-"T-Bonds" are bonds issued by the U.S. Treasury and are safer than corporate bonds
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Personal Financial Literacy Module 4 DBA
Bonds - ANSWER--Purchasing a bond means giving a loan to a company
-Requires a minimum amount of money to purchase and a minimum length of time to hold on to the bond
-"T-Bonds" are bonds issued by the U.S. Treasury and are safer than corporate bonds
-A moderate investment
Mutual Fund - ANSWER--Share of ownership in a mixture of companies
-Requires a minimum amount of money to invest
-Can earn significantly more money but also potentially lose more
-But your money is not based on only one company
-A moderate investment
Real Estate - ANSWER--Ownership of property, which may include land and homes or other buildings
-Requires maintenance costs, including upkeep of the land and any building maintenance or repairs, as well as local taxes on the property and services for it such as water and electricity
-Best for a long-term investment—values generally rise over time but are heavily dependent on market, regional, and local conditions
-A moderate investment
Stocks - ANSWER--Share of ownership in a single company
-Makes the most money over a long period of time
-If company fails, you lose all your money
-An aggressive investment
Futures - ANSWER--Betting on the future price of a common product, like wheat -You make a legal commitment to buy a certain amount, at a certain date for a certain price
-Riskiest of the investments, can earn or lose large amounts of money
-An aggressive investment
Real Return - ANSWER-The amount you earn from an investment after taxes, administrative costs, and inflation
Dividends - ANSWER-Payout to stockholders of a portion of company profits, based on number of shares owned
Common Stock - ANSWER-Allows investors to vote on various company issues, such as choosing its leaders, and it often offers dividends, which can rise and fall with company profits
Preferred Stock - ANSWER-Does not usually come with voting rights, but it does offer fixed dividends, meaning the dividend payout will not change with the company's increased or decreased profits
Exchange Rates - ANSWER-Rate at which one currency may be traded for another
Supply and Demand - ANSWER-The main factor affecting stock prices is supply and demand. Higher interest rates mean it costs more to borrow money. Because access to funds to expand is more expensive, businesses may slow or halt their growth, showing a potential profit decrease. Investors may then demand fewer shares of stock, causing the value of stocks to drop. People's expectations affect their behavior.
Trends and Shares - ANSWER-When considering whether to purchase stocks, investors also look at trends. Long-term trends are important and reflect overall economic conditions, including inflation and unemployment rates. In addition, with stocks, the number of shares owned is significant to returns. When prices are low, an investor can buy more shares to multiply future returns, assuming they've chosen wisely, and the companies bounce back and grow again.
Company Age - ANSWER-The age and the value of a company will affect stock prices. A start-up tech company will have the potential for a higher rate of return since the stock will be cheaper per share than a "blue chip" company like Disney; however, that higher return potential also comes with high risk since a start-up is more likely to fail.
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