IFYF Unit 9 Review Questions

• Introduction
• Unit 1: Basic Building Blocks of Successful Financial Management
• Unit 2: Investing Basics
• Unit 3: Finding Money to Invest
• Unit 4: Ownership Investments
• Unit 5: Fixed-Income Investing
• Unit 6: Mutual Fund Investing
• Unit 7: Tax-Deferred Investments
• Unit 8: Investing Small Dollar Amounts
• Unit 9: Getting Help: Investing Resources
• Unit 10: Selecting Financial Professionals
• Unit 11: Investment Fraud

• Study Guide
• Action Steps
• Monthly Investment Messages
• Glossary

Unit 9

Getting Help: Investing Resources Review Questions

1. What is an investment club? How does an investment club operate?
2. What are the advantages and disadvantages of an investment club?
3. What sources of information might an investment club consult, or utilize, when making investment decisions?
4. Why has the Internet grown in popularity with investors?
5. Summarize the advantages of using online investment resources.
6. Summarize the disadvantages of using online investment resources.
7. Explain “churning”. Why is an individual online investor susceptible to this practice?
8. What major considerations, and features, are important when choosing an online broker?
9. What is the difference in a market order for a round lot and a market order for an odd lot? Why might the fees vary?
10. Online brokerages share security issues with traditional brokers in addition to security issues that are unique to online trading. What are these issues and what strategies are in place to protect the online investor?
11. How does an investor open an online account?

Just Do It!! Acting on What You Learned

Because Internet sites change frequently, the uniform resource locator (URL) for the specific tool or page is not given below. Instead, the URL for the site, and instructions for navigating within the site are provided. It is our hope that this method will encourage you to explore and learn from the site, and more importantly, avoid the message: “Error: Site Not Found.”

Disclaimer: References to commercial sites are not an endorsement of the company or the financial products or services offered. These sites are included only because of their educational value; sites provided by competing companies may offer similar benefit. We encourage you to explore other sites of your choice.

1. Check the investment club sources listed in Unit 9 for the National Association of Investors Corp. (NAIC) Better Investing Community or the NAIC Youth Membership Department. Is there an investment club(s) near you? Contact a club to learn about the membership requirements and club objectives. Ask if you can attend a meeting as a guest to meet the members and observe the club interaction. The educational session at each meeting is open to the public at some clubs.

2. Visit the Internet sites for several of the online brokers cited at the end of Unit 9. Compare costs, services, and resources available to investors. Take a “test drive” using the demonstration capabilities to assess the ease of operation and your comfort level.

3. Using the extensive list of Internet resources cited at the end of Unit 9, systematically visit the sites, or a sampling of them, to learn what kinds of information are provided, and the cost for using any, or some, of the website services. Be sure to bookmark your favorite websites for future reference.

4. Using one of the websites cited at the end of Unit 9, establish a mock portfolio or identify a list of stocks or mutual funds that you will track. Some sites (e.g., www.morningstar.com or www.moneycentral.msn.com) will automatically provide periodic information and updates about your target list. Track your portfolio over a period of time to determine how much money you would have made or lost. This can be an interesting activity for the family to involve teenagers in picking individual stocks, or mutual funds, to include and track.

5. For some, online trading has become as addictive, and problematic, as gambling. Both can lead to bankruptcy and disrupt normal work and home life. One compulsive online trader reported making between 5 and 100 trades per day. To learn more, or to identify sources of help, contact the following:

• www.gamblersanonymous.org
  • Gamblers Anonymous (or call 213-386-8789)

• www.ncpgambling.org
  • National Council on Problem Gambling for referrals of mental health practitioners certified as gambling counselors or **call 800-522-4700

• www.ccpg.org
  • Connecticut Council on Problem Gambling