(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 'bear market'?
Answer: A decline of 20% or more from recent highs
A bear market is commonly defined as a drop of 20% or more from recent peaks.
Rebalancing a portfolio means:
Answer: Adjusting holdings back to target allocations
Rebalancing restores a portfolio to its intended asset allocation after market drift.
An employer 401(k) match is best described as:
Answer: Free money added to your contributions
An employer match adds money to your retirement account based on what you contribute.
Which statement about stocks vs. bonds is generally true?
Answer: Stocks offer higher potential returns with higher risk
Stocks historically offer higher returns but with greater volatility than bonds.
A mutual fund's expense ratio represents:
Answer: Annual operating costs as a percentage of assets
The expense ratio is the yearly cost of owning a fund, expressed as a percent of assets.
Why might a young investor favor a stock-heavy portfolio?
Answer: A long time horizon allows recovery from downturns
Younger investors can take more risk because they have time to recover from market dips.
Reinvesting dividends rather than spending them helps:
Answer: Accelerate compound growth
Reinvesting dividends buys more shares, boosting the effect of compounding over time.