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Saving & Investing - Head Matters
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1. Choose the correct definition for Certificate of Deposit (CD):
A share of ownership in a company.
A certificate from a bank stating that the individual has a specified sum on deposit, usually for a given period of time at a fixed rate of interest.
Employer-sponsored retirement plan for for-profit businesses.
Pools the money of many and invests it in a variety of stocks, bonds, and money market assets.
2. Choose the correct definition of Stock:
Earning interest on the interest on an investment.
A share of ownership in a company.
A set amount of money loaned to an issuer, like the government or corporation, which promises to pay it all back on a certain date with a set amount of interest.
Safe investments which return a relatively low interest rate.
3. Choose the correct definition for Bond:
General rise in the price of goods and services that reduces the purchasing power of money.
Pools the money of many and invests it in a variety of stocks, bonds, and money market assets.
Employer-sponsored retirement plan for for-profit businesses.
A set amount of money loaned to an issuer, like the government or corporation, which promises to pay it all back on a certain date with a set amount of interest.
4. Choose the correct definition for Rule of 72:
A share of ownership in a company.
Don't put all your investment eggs in one basket.
How many years it will take for an investment to double by dividing 72 by the interest rate being paid.
5. Choose the correct definition for Inflation:
Earning interest on the interest on an investment.
A share of ownership in a company.
Don't put all your investment eggs in one basket.
General rise in the price of goods and services that reduces the purchasing power of money.
6. Choose the correct definition for Diversification of Risk:
How many years it will take for an investment to double by dividing 72 by the interest rate being paid.
Don't put all your investment eggs in one basket.
Safe investments which return a relatively low interest rate.
Earning interest on the interest on an investment.
7. Choose the correct definition for Compound Interest:
Don't put all your investment eggs in one basket.
Earning interest on the interest on an investment.
General rise in the price of goods and services that reduces the purchasing power of money.
A share of ownership in a company.
8. Choose the correct definition for Mutual Fund:
A set amount of money loaned to an issuer, like the government or corporation, which promises to pay it all back on a certain date with a set amount of interest.
A certificate from a bank stating that the individual has a specified sum on deposit, usually for a given period of time at a fixed rate of interest.
Pools the money of many and invests it in a variety of stocks, bonds, and money market assets.
A share of ownership in a company.
9. Choose the correct definition for Money Market:
A set of money loaned to an issuer, like the government or corporation, which promises to pay it all back on a certain date with a set amount of interest.
A certificate from a bank stating that the individual has a specified sum on deposit, usually for a given period of time at a fixed rate of interest.
General rise in the price of goods and services that reduces the purchasing power of money.
Safe investments which return a relatively low interest rate.
10. Choose the correct definition for 401k Plan:
Employer-sponsored retirement plan for for-profit businesses.
A plan to earn $401,000.
How many years it will take for an investment to double by dividing 72 by the interest rate being paid.
General rise in the price of goods and services that reduces the purchasing power of money.
11. Kim just graduated from college, got her first "real" job, and is thinking about her savings and investment strategies. She is in her mid-20's. What should be her top priorities for savings and investments now? (choose three correct answers)
Emergency fund.
Enrolling in her employer's retirement plan.
Buying stocks and bonds.
Saving 10% of her take home pay.
12. The relationship between risk and return is best understood as (choose two correct answers):
The higher the rate of return, the greater the risk.
Risk is not related to return.
The lower the return, the lower the risk.
As you near retirement age, you should plan to put more investments in a riskier funds to get the best returns.
13. Which of the following has the lowest risks? (choose two correct answers)
Real estate.
Stocks.
Insured savings accounts.
Government bonds.
14. Investors will NOT make money with stocks by:
Receiving a dividend or a payment from the earnings of the corporation.
Buying high; selling low.
Selling stock when the stock price goes up.
Owning a share of the company.
15. Thomas wants to save and invest but he doesn't know how to start. You advise him that the best way is to use goal setting by:
Writing his goals down.
Use your goals so he doesn't feel too much disappointment if he doesn't reach them.
Setting his goals higher than he will ever reach to inspire him to save money.
List goals that are vague so he can use his money in many different ways.
16. True or False: Your money in banks and credit unions is insured by the federal government up to $250,000 even if the bank or credit union is forced to close.
True
False
17. True or False: The primary goal of financial planning is financial stability.
False
True
18. True or False: Only the rich can buy stocks and bonds.
True
False
19. True or False: A good time to start saving for retirement is when you are in your 30's.
True
False
20. True or False: Even a person without much income can participate in a mutual fund.
False
True
21. True or False: Simple interest is better than compound interest when it comes to making your money grow.
True
False
22. True or False: Your employer doesn't have a retirement plan for you so you can't save for retirement.
False
True
23. True or False: A certified financial planner can help you figure out the best way to save and invest.
True
False
24. True or False: Begin saving by participating in an automatic deduction from your paycheck so you pay yourself first.
False
True
25. True or False: An emergency fund should contain only one month's expenses.
False
True
Calculating...
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