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 ________.
Choose wisely. There is only one correct answer.
Risk premium. This is the "reward" for taking on risk.
2.
A reasonably intelligent person who studies the tax code from time to time can probably make good decisions about how to shelter investment income from taxes.
Choose wisely. There is only one correct answer.
False. Even the simplest workplace retirement plan can have tax implications that require expert advice.
3.
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.
4.
It is never smart to invest through a full-service broker.
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False. Investors who do not want to put in the time or effort to research and manage their investments may find a full-service broker essential.
5.
Inflation affects _______.
Choose wisely. There is only one correct answer.
Both the value of investments and interest rates. Inflation affects both, which is why many investors watch it carefully.