Strategy Beginner: Introduction to Investment Strategy

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1.
_______ are taxed at a relatively low rate if you hold your investments long enough.
Choose wisely. There is only one correct answer.
Capital gains. Long-term capital gains are taxed at a lower rate to encourage investment.
2.
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.
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 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.
5.
Companies that do not pay dividends might be good growth investments.
Choose wisely. There is only one correct answer.
True. Often, companies do not pay dividends in order to funnel more profits into growth.