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Stocks 101: Stocks versus Other Investments

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1.
Which of the following investments are the most volatile in their pricing?
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Stocks. Stocks are the most volatile. Over the long term, stocks have a higher return than bonds or savings accounts. But this volatility means that over the short term, other types of investments may significantly outperform stocks.
2.
Buying shares of stock in a company gives you ownership in that company.
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True. Stock is about ownership (also called equity) and all the benefits of that ownership.
3.
What is perhaps the main reason to invest in stocks as opposed to other investments?
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They provide the highest potential returns. In fact, over the long term, no other type of investment performs better.
4.
If you buy a stock, it will definitely increase in value over time.
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False. Though stocks on the whole have increased in value substantially over the decades, we should not say that a given stock will definitely increase in value over time. Some stocks simply don't.
5.
When you buy a stock, you are _______.
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Buying an ownership interest in a company. When you buy a stock, you are buying an ownership interest in a company. Bonds are loans from companies and the government.