TGFI FIQ Test (Result)
as of September 19, 2016
Common mistakes
[ Rule of 72 ]
The rule of 72 is a shortcut to estimate the number of years required to double your money at a given annual rate of return. By dividing 72 by the annual rate of return, investors can get a rough estimate of how many years it will take for the initial investment to duplicate itself.
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[ Savings account vs Bonds ]
Bills ◘ debt securities maturing in less than one year
Notes ◘ debt securities maturing in one to 10 years
Bonds ◘ debt securities maturing in more than 10 years
> There’s another reason some avoid bonds. Unless you hold your bonds to maturity, you can lose money.

Technically, debt securities with a term of less than one year are generally designated money market instruments rather than bonds.
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[ Bond ]
A bond is a debt investment in which an investor loans money to an entity (typically corporate or governmental) which borrows the funds for a defined period of time
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[ Interest rate vs bonds ]
Interest rate risk affects the value of bonds more directly than stocks, and it is a major risk to all bondholders. As interest rates rise, bond prices fall, and vice versa. The rationale is that as interest rates increase, the opportunity cost of holding a bond decreases, since investors are able to realize greater yields by switching to other investments that reflect the higher interest rate.

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