Strategy Beginner: Introduction to Investment Strategy

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1.
When interest rates go up, the value of your current bonds on the market _______.
Choose wisely. There is only one correct answer.
Goes down. Market prices of bonds tend to have an inverse relationship to interest rates.
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.
If your investment strategy is risk-averse, you avoid risk whenever possible.
Choose wisely. There is only one correct answer.
False. A risk-averse strategy does not seek to avoid risk entirely, but to get the best possible return at the lowest possible risk.
4.
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.
5.
If you might need to borrow against your principal, you need _______.
Choose wisely. There is only one correct answer.
A collateral investment. A collateral investment can be used to secure a loan.