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.
Companies that do not pay dividends might be good growth investments.
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True. Often, companies do not pay dividends in order to funnel more profits into growth.
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.
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.
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.