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.
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.
3.
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.
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.
If your investment strategy is risk-averse, you avoid risk whenever possible.
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False. A risk-averse strategy does not seek to avoid risk entirely, but to get the best possible return at the lowest possible risk.