Question

questions:
determine if the following statements are true or false.

1. mutual funds are a way to diversify your portfolio and mitigate risk.
2. the value of stocks always increases.
3. the more shares you own of a company the more you own of the company.
4. people’s emotion, information, and rumors have a powerful influence on moving the price of a stock.
5. compound interest earns money on the principal only.

Explanation:

1. Mutual funds pool money to invest in a variety of assets, which spreads out risk across different securities, so this statement is true.
2. Stock values are volatile and depend on market conditions, company performance, and other factors; they can decrease as well as increase, so this statement is false.
3. Owning more shares of a company means holding a larger percentage of the company's total outstanding shares, which equates to greater ownership stake, so this statement is true.
4. Investor sentiment, news, and rumors drive buying and selling behavior, which directly impacts stock supply and demand, thus affecting prices, so this statement is true.
5. Compound interest earns interest on both the initial principal and the accumulated interest from previous periods, unlike simple interest which only earns on principal, so this statement is false.

Answer:

1. True
2. False
3. True
4. True
5. False