(Investor's Knowledge) Flashcards
7 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 7 (Investor's Knowledge) flashcards as text
What is a capital gain?
Answer: Profit from selling an asset above its purchase price
A capital gain is the profit realized when an asset is sold for more than it cost.
Index funds are designed to:
Answer: Match the performance of a market index
Index funds aim to replicate, not beat, the returns of a benchmark like the S&P 500.
Buying stock 'on margin' means:
Answer: Borrowing money from a broker to invest
Margin trading involves borrowing funds from a broker to purchase securities.
Inflation reduces the:
Answer: Purchasing power of money over time
Inflation erodes purchasing power, meaning money buys less over time.
A 'bull market' is characterized by:
Answer: Rising prices and investor optimism
A bull market is a sustained period of rising asset prices and optimism.
Why is an emergency fund recommended before aggressive investing?
Answer: To avoid selling investments at a loss during emergencies
An emergency fund lets you cover unexpected costs without liquidating investments at a bad time.
The 'rule of 72' estimates:
Answer: Years to double an investment at a given rate
Dividing 72 by the annual return rate approximates the years needed to double your money.