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- 1. Multiple ChoiceThe rate of return ishow much an investment gains or loses value over a period of timehow much the bank charges you in interest when you take out a loanhow much money you lost in an investmenthow fast your money will double in value
- 2. Multiple ChoiceThe basic rule of a risk-to-return relationship is that thelower the risk, the higher the return ratehigher the risk, the higher the return ratehigher the risk, the lower the return ratetwo are not related
- 3. Multiple ChoiceWhich one of the following types of investments has the lowest risk and lowest rate of return?savings bondsstockscollectiblesreal estate
- 4. Multiple ChoiceWhich one of the following types of investments has the highest risk and the highest potential rate of return?Money Market AccountsStocksCertificates of Deposit (CDs)Savings Bonds
- 5. Multiple ChoiceWhich statement below is true about mutual funds?There are no fees or expenses associated with mutual fundsMutual funds offer guaranteed returnsMutual funds are convenient and professionally managedYou can choose which stock to include in your mutual funds
- 6. Multiple ChoiceThe time value or money concept can best be demonstrated using which of the following?Pay yourself firstHigher the risk, higher the returnInvest earlyBuy low, sell high
- 7. Multiple ChoiceOne downfall of a CD or Certificate of Deposit isyou can overdraw the accountthere is a penalty if you cash it in earlyyou have to wait at least 30 years to cash it inthe interest rate can change
- 8. Multiple ChoiceAn income investmentis less riskymay provide a steady incomemay also be a growth investmentall of the above
- 9. Multiple ChoiceWhich of the following is NOT true about growth investments?Growth investments involve more riskGrowth investments usually must be sold before you will get any return on your investmentGrowth investments have less potential for big gainsReal estate is an example of a growth investment
- 10. Multiple ChoiceIn the future, a dollar will most likely be worthless than a dollar todaymore than a dollar todaythe same as a dollar today
- 11. Multiple ChoiceYou become part owner of a company byPurchasing a company's bondsBecoming CEO of a companyPurchasing a company's stockbuying dividends of the company
- 12. Multiple ChoiceWhich of the following is NOT a way to make money off the stock market?Buy stock when the cost is low, and sell it when it is highBuy stock, and sell it at the same pricebuy stock that pays out a dividend
- 13. Multiple ChoiceWho should take the least risk when investing?A 20 year old just starting careerA 40 year old with a familyA 40 year with no familyA 60 year old nearing retirement
- 14. Multiple ChoiceWhich is false about dividends?Companies that pay a dividend will continue to pay a dividendDividends are the profits of a company, divided up to the shareholdersDividends can increase or decreaseIf a company stops paying a dividend, their stock price will likely fall
- 15. Multiple ChoiceA 401K Plan isoffered by banks for parents and grandparents to begin investing for college for their childrenoffered by employers, and the employer often contributes money on behalf of the employee tooonly for those people who do not have an IRAowned and controlled by your employer
- 16. Multiple ChoiceAn IRA isan account where you can save for retirement on your ownnot a good investment because it is so riskytaxed at higher rates than a 401Konly for those people who do not have a 401K
- 17. Multiple ChoiceWhat is the term that refers to how comfortable a person is with the ups and downs of investing?Risk ToleranceDiversificationCompoundingMutual Fund
- 18. Multiple ChoiceWhich is an example of an income investment?Money Market AccountMutual FundDiversificationGrowth stock
- 19. Multiple ChoiceWhat is the process referred to that earns interest on interest?CompoundingDiversificationSimple InterestSimple Calculation
- 20. Multiple ChoiceSpreading your money among different savings and investmentsDiversificationCompoundingRisk ToleranceRisk-taking
- 21. Multiple ChoiceT/F: You can purchase stock from any company you would like, if you have the money.TRUEFALSE
- 22. Multiple ChoiceT/F: People who invest in the stock market will automatically make money.TRUEFALSE
- 23. Multiple ChoiceT/F: When you purchase stocks, you can only lose as much money as you paid for the stocks, if the company fails.TRUEFALSE
- 24. Multiple ChoiceT/F: Real Estate can be a growth and an income investment.TRUEFALSE
- 25. Multiple ChoiceT/F: Buying a dividend is the easiest way for an investor to diversify.TRUEFALSE
- 26. Multiple ChoiceT/F: Your risk tolerance can change throughout your life.TRUEFALSE
- 27. Multiple ChoiceT/F: Some mutual funds are comprised of a combination of stocks from many different sectors.TRUEFALSE
- 28. Multiple ChoiceWhat is the purpose of a company issuing stock?To grow equity interests that encourages diversificationTo raise money that can be used to grow the companyTo increase the influence of the current owners of the companyTo exempt the company from paying taxes
- 29. Multiple ChoiceWhat is true about saving and investing?Saving is more risky than investingYou have a greater chance of making more money investing than savingthey are essentially the same thingyou can diversify better with savings options
- 30. Multiple ChoiceIf the Market Cap for Principal Financial Group is 12 Billion, what size is this company considered?SmallMidLargeExtra Large
- 31. Multiple ChoiceIf the Cheesecake Factory is valued at 2.3 Billion, what size market cap is this company considered?SmallMidLargeExtra Large
- 32. Multiple ChoiceIf a company is valued at $500 Million, what size market cap is this considered?SmallMidLargeExtra Large
- 33. Multiple ChoiceWhat type of risk is associated with large cap companies?lowmediumhighextremely high
- 34. Multiple ChoiceWhat type of risk is associated with small cap companies?lowmediumhighextremely low
- 35. Multiple ChoiceAn investment that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds and similar assets--helps you to diversify and to have professionals manage your money for a feemutual fundstock indexbondstock
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