INVESTING Study Guide

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What is a prospectus?

What are 3 advantages of investing in mutual funds? Explain what is meant by each.

What is the main disadvantage of investing in mutual funds and how is it a disadvantage?

What is a mutual fund?

In investing, what is meant by the phrases high risk/high return and low risk/low return?

What is stock?

How do you make money when trading in stocks?

With mutual funds, what is meant by Net Return and why is it important?

Why are you better off investing your money rather than just putting it in a savings account?

Explain what is meant by risk when it comes to investing.

When it comes to mutual funds, what is meant by load? When should you pay a load when buying mutual funds?

Why can you afford to make investments with higher risk when you are young?

In investing, what is meant by diversification and why is it important?

When you begin investing, how will you invest your first $5000 and why?