What is a stock?
A stock represents ownership in a company and a claim on a part of its profits.
What is a bond?
A bond is a fixed income instrument representing a loan made by an investor to a borrower.
What is the primary purpose of mutual funds?
Mutual funds pool money from multiple investors to invest in a diversified portfolio of securities.
What is the difference between ETFs and mutual funds?
ETFs trade on stock exchanges like individual stocks, while mutual funds are priced once per day after markets close.
What is a derivative?
A derivative is a financial instrument whose value is based on the value of another asset.
What is liquidity in financial instruments?
Liquidity refers to how quickly and easily an asset can be converted into cash without significantly affecting its price.
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What is the risk-return tradeoff?
The risk-return tradeoff means that higher returns typically come with higher risks.
What is diversification?
Diversification is a strategy of investing in different assets to reduce risk.
What is the role of an investment advisor?
An investment advisor provides clients with guidance on investment strategies and portfolio management.