Strategy Beginner: Long-Term Investing

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1.
Bonds with short maturities are effective investments for long-term investors.
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False. Bonds with long maturities are effective investments for long-term investors.
2.
Which of the following is not generally a goal of long-term investing?
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Current income. Receiving current income is not generally a goal of long-term investing. Long-term investors understand that they will have to put off income for months or years.
3.
Tax-deferred investment accounts usually come with early withdrawal penalties.
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True. Early withdrawal penalties are meant to keep money in investments for long periods.
4.
The ability to convert an investment into cash with little chance of loss is called ________.
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Liquidity. The more easily an investment can be converted to cash, the more liquid it is.
5.
The more an investments price changes, _______.
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The higher its volatility. Price changes and volatility are often found together in certain investments.