Strategy Beginner: Introduction to Investment Strategy

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1.
When interest rates go up, the value of your current bonds on the market _______.
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Goes down. Market prices of bonds tend to have an inverse relationship to interest rates.
2.
_______ 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.
3.
If you might need to use your principal soon, which aspect(s) of trading would especially concern you?
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Maturity date and minimum investment. Minimum investment determines how much of your principal will be tied up, and the maturity date how long.
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.
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.