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Strategy Beginner: Introduction to Investment Strategy

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1.
The greater potential return that investments offer in return for accepting greater risk is called ________.
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Risk premium. This is the "reward" for taking on risk.
2.
Investors diversify to reduce the risks of different business trends.
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True. Diversifying helps them avoid any particular trend affecting their investments too much.
3.
_______ are taxed at a relatively low rate if you hold your investments long enough.
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Capital gains. Long-term capital gains are taxed at a lower rate to encourage investment.
4.
The more liquid an investment is, _______.
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The easier it is to turn into cash. Liquid investments are easy to turn into cash, either by withdrawing from them or selling them.
5.
If you might need to use your principal soon, which aspect(s) of trading would especially concern you?
Choose wisely. There is only one correct answer.
Maturity date and minimum investment. Minimum investment determines how much of your principal will be tied up, and the maturity date how long.