Investment Vehicles and Instruments Flashcards
6 cards from real Investment practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Investment Vehicles and Instruments flashcards as text
What is an Exchange-Traded Fund (ETF)?
Answer: A fund that tracks an index and trades on a stock exchange like a stock
An ETF is a pooled investment fund that tracks an index, commodity, or asset class and trades on stock exchanges throughout the day.
Which type of bond is issued by the U.S. federal government and considered one of the safest investments?
Answer: Treasury bond
U.S. Treasury bonds are issued by the federal government and backed by the full faith and credit of the United States, making them among the safest investments.
What is a mutual fund?
Answer: A pooled investment vehicle managed by professionals that collects money from many investors
A mutual fund pools money from many investors to purchase a diversified portfolio of stocks, bonds, or other securities managed by professional fund managers.
What does the term 'derivative' refer to in investing?
Answer: A financial contract whose value is derived from an underlying asset such as a stock or commodity
A derivative is a financial contract that derives its value from an underlying asset, index, or rate, such as options and futures contracts.
What is a money market fund?
Answer: A low-risk mutual fund that invests in short-term, high-quality debt instruments
A money market fund invests in highly liquid, short-term debt instruments like Treasury bills and commercial paper, offering stability and modest returns.
What is a REIT (Real Estate Investment Trust)?
Answer: A company that owns income-producing real estate and allows investors to buy shares
A REIT is a company that owns, operates, or finances income-producing real estate, allowing individual investors to earn dividends from real estate without directly owning property.