Chapter 14 Review Mutual Funds & Other Types of Investments

1. Chapter 14 ReviewMutual Funds & Other Types of Investments Personal Finance

2. 1 • An individually owned unit in an apartment-style complex with shared ownership of common areas. • Condo

3. 2 • Also known as a limited partnership. • Real estate syndicate.

4. 3 • A term for very risky investments. • Speculative

5. 4 • Why are collectibles a speculative investment? • Subject to consumer tastes • Volatile prices • Difficult to sell

6. 5 • List an advantage of investing in mutual funds. • Diversity • Professional management • Low initial investment

7. 6 • The organizer of a real estate syndicate is called the general partner or ________. • Syndicator

8. 7 Mutual fund companies offer a variety of funds covering a whole range of investment objectives. The complete offering of a mutual fund company is their _________. family of funds

9. 8 • A building with two separate living quarters. • Duplex

10. 9 • List a disadvantage to being a landlord. • Tenants who don’t pay or damage property.

11. 10 • List an advantage to investing in real estate. • Property usually appreciates at a rate higher than inflation

12. 11 • Why do banks ask for a larger down payment when a borrower is taking out a mortgage for a rental property? • Risk

13. 12 • A term that means easy to convert to cash. • Liquid

14. 13 • The investors in a real estate syndicate are called __________and are only liable for the amount of their initial investment. • limited partners

15. 14 • List the 2 ways in which an investor can make money off of mutual funds. • Dividends • Capital gain

16. 15 • A corporation that pools the money of many individuals to invest in real estate. • REIT

17. 16 • A fee that helps defray the costs of marketing and distributing a mutual fund. • 12b-1 fee

18. 17 • The most commonly traded collectible. • Coins

19. 18 • Another term for real estate. • Real property

20. 19 • Other than coins, list an example of a collectible. • Antiques, baseball cards

21. 20 • Why are municipal bonds less risky than corporate bonds? • Municipal bonds are less likely to be defaulted on.

22. 21 • The goal of this type of mutual fund is to buy stocks that will increase in value over time. Investors hope to profit through capital gain, not dividends. • Growth fund

23. 22 • What is capital gain? • Income earned on an investment

24. 23 • ____________ is land and buildings that produce lease or rental income. • Commercial property

25. 24 • An _______________ invests in stocks of new or out-of-favor companies and industries that the fund managers think will achieve above-average increases in value. • aggressive growth fund

26. 25 • A term for a very risky bond. • Junk bond

27. 26 • A legal document that offers securities or mutual fund shares for sale. • Prospectus

28. 27 • A single-family home purchased to rent. • Detached house

29. 28 • A decline in the value of property due to normal wear and tear. • Depreciation

30. 29 • Vacant land or unimproved property. • Raw land

31. 30 • List a disadvantage to investing in precious metals. • Volatile prices • Storage

32. 31 • If a mutual fund is purchased through a broker, you will pay a sales fee called a _____. • Load

33. 32 • The NASDAQ contains this type of stocks. • Many technology stocks among others.

34. 33 • These items are made valuable because they are old, no longer made, unusual, irreplaceable, or of historic importance. • Collectibles

35. 34 • The goal of this type of mutual fund is to buy securities that pay dividends. • Income fund

36. 35 • ________ are contracts to buy and sell commodities or stocks for a specified price on a specified date in the future. • Futures

37. 36 • A sales charge paid when you buy an investment. • Front-end load

38. 37 • An investment in a pool of mortgages that have been purchased by a government agency. • Participation certificate

39. 38 • A mutual fund that attempts to minimize risk by investing in a mixture of stocks (preferred and common) and bonds (corporate and municipal) that provide both current income and growth. • Balanced fund

40. 39 • The rent is enough to cover mortgage, taxes, and upkeep. • Positive cash flow

41. 40 • A real estate investment that is similar to a mutual fund. • REIT

42. 41 • A sales charge paid when you sell an investment. • Back-end load

43. 42 • A _________________is a mutual fund whose investment goal is to earn returns from both dividends and capital gains. • growth and income fund

44. 43 • The rent is not enough to cover costs. • Negative cash flow

45. 44 • An __________is a mutual fund that tries to match the performance of a particular index by investing in the companies included in that index. • Index fund

46. 45 • What type of securities would a Dow Fund contain? • Blue Chips

47. 46 • Collects rent, hires and pays people to make repairs and maintain the property, charges a fee for his or her services, and remits the difference to the owner of the property. • Property manager

48. 47 • A fund that does not charge a sales fee when you buy or sell because no sales people are involved. Funds are purchased directly from the company. • No-load fund

49. 48 • A mutual fund that invests in bonds to try to achieve stable income with minimal risk. • Bond fund

50. 49 • A landlord that lives at the property. • Resident landlord