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.
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.
3.
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.
4.
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.
5.
Inflation affects _______.
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Both the value of investments and interest rates. Inflation affects both, which is why many investors watch it carefully.