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- 1. Multiple ChoiceWhy is compound interest more advantageous than simple interest?It’s more difficult to calculate, so fewer people use compound interest, making more profits for those who do.Compound interest accumulates very rapidly, so you only have to save for 3 years or fewer to earn far more money.Compound interest is attached to the stocks with the highest risk, so you get the highest interest on themIn compound interest, you earn interest on not only your principal, but also on the interest you’ve already made.
- 2. Multiple ChoiceRule of 72: How many years to double my money if I get a 9% return on investment?8 years7.2 year7 years9 years
- 3. Multiple ChoiceWhen you buy a stock, you are buying a small piece of _______ in a company.debtownershiprisk
- 4. Multiple ChoiceThe Rule of 72 is used to find how long an it will take forinvestments to doubledebt to doubleinterest to increase
- 5. Multiple ChoiceWhy do companies issue stocks?To create and investment opportunity into other businesses.To increase employee cooperationTo be traded individuallyTo raise money for economic investment
- 6. Multiple ChoiceWhat is an IPO?Initial Polling OfficeInitial Public OfferingInternational Public OfficeIncreasing Public Opportunity
- 7. Multiple ChoiceThe chance of loss.StockRewardRiskReal Estate
- 8. Multiple ChoiceJustin wants to go to spend a month traveling Europe next summer but doesn’t have the money to do so. He’s thinking of investing the $700 he currently has saved in stock in his favorite restaurant in hopes of earning the money for the vacation. Why shouldn’t he do that?Investing in one company’s stock is quite risky.Investing your whole savings in the stock market is a bad financial move.One year probably isn’t enough time for one stock to turn $700 into a month’s vacation.All of the above
- 9. Multiple ChoiceWhich of the following statements are true?Between cash, stocks, and bonds, bonds are typically considered the riskiest.Stocks are the riskiest investments out there.Putting money into a savings account with interest is the ideal way for a young adult to invest.Historically, stocks have had far greater annual returns than cash, government bonds, and savings
- 10. Multiple ChoiceYour risk tolerance for investing should be determined by these two factors:Your stocks and bondsYour time horizon and when you will need access to the moneyYour debits and creditsYour education level and ethnicity
- 11. Multiple ChoiceWhich of the statements below, regarding inflation, is accurate?You want the inflation rate to be higher than the interest you’re earning on your investments.We already know what the inflation rate will be in the year 2020, and we can use this information to make wise investments.Historically, US inflation has been roughly 3%If you invest your money, you don’t need to worry about inflation.
- 12. Multiple ChoiceYou deposit $1,000 into a five year certificate of deposit (a type of savings account with a fixed rate of interest) earning 1% per year that compounds interest annually. After five years, the balance in your account will be…About $1000More than $1000 but less than $1010More than $1010 but less than $1030More than $1050
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