Strategy Beginner: Introduction to Investment Strategy

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1.
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.
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.
In investment strategies, risk in traditional terms is _______.
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Good and bad. Risk in traditional terms can mean you fail to make money, or even lose it; but possible returns usually increase with the amount of risk.
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.
Investments in which earnings are allowed to build tax-free are called ______.
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Tax-deferred. Tax-deferred investments are those in which earnings are allowed to build tax-free until you receive them as income.