Investment Options and Financial Instruments Quiz

Bonds are generally considered low-risk because they are debt securities with fixed interest payments.

Mutual funds pool money from multiple investors to invest in a diversified portfolio of securities.

CDs are time deposits offered by banks with fixed terms, commonly ranging from a few months to several years.

Tangible assets are physical assets that have a discernible value, such as real estate, machinery, or inventory.

A 401(k) is an employer-sponsored retirement plan, not an IRA, which includes Traditional IRAs, Roth IRAs, and others.

Preferred stock represents ownership in a company and doesn't have fixed interest payments characteristic of fixed-income securities.

Derivatives are financial contracts whose value is derived from the performance of an underlying asset, often used for speculation.

Hedge funds aim to generate maximum returns for their investors, often using aggressive strategies such as leverage and derivatives.

Dividend yield is a measure of dividend income relative to the stock price and doesn't directly affect bond prices.

Traditional savings accounts are insured by the Federal Deposit Insurance Corporation (FDIC), providing protection for depositors' funds.

ETFs are typically passively managed, meaning they aim to replicate the performance of a particular index rather than actively picking securities.

REITs pool investors' money to invest in income-generating real estate properties, distributing rental income to shareholders.

Venture capital typically invests in startups or small businesses with high growth potential in exchange for equity.

Real estate crowdfunding allows investors to diversify their portfolios by investing in multiple properties with smaller amounts of capital.

Investors in a real estate limited partnership have a say in property management decisions, providing more control over investment outcomes.