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- 1. Multiple ChoiceCompound interest is best defined as:Interest earned on the principal investmentAny form of interest earned from saving or investingEarning interest on interestThe effect interest has on the total return on investment
- 2. Multiple ChoiceWhich statement best reflects the philosophy of “pay yourself first”?An individual should save whatever money is left over after paying monthly billsAn individual should pay all fixed expenses before paying flexible expensesAn individual should set aside a predetermined amount of money for saving before using any of that money for spending.An individual should spend money on the items and activities enjoyed in life before paying any other expenses
- 3. Multiple ChoiceHarris is concerned about the effects of inflation on his investment returns. Which statement best describes inflation?The rise in the general level of pricesThe uncertainty about the return on an investmentThe number of times something happens to moneyThe projected value of an investment at the end of a specified time frame
- 4. Multiple Choice
It is best to have the rate of return on an investment _______than the rate of inflation.
Lower, in order to minimize taxes
Lower, in order to minimize risk
Higher, to maintain purchasing power
- 5. Multiple ChoiceSaving money over time for a large purchase is a(n):emergency fundsinking fundinterest fundpersonal finance
- 6. Multiple ChoiceAt your age, a fully funded emergency fund should be:$1,000$5,000$100$500
- 7. Multiple ChoiceThe percent by which your money grows is called...PrincipalInterest Rate / Rate of ReturnCompound InterestSimple Interest
- 8. Multiple ChoiceInitial amount of money lent, borrowed, or invested is called...Interest RateOriginalPrincipalTotal
- 9. Multiple Choice
A savings account that is set aside to be used only for emergency expensesSafety FundEmergency FundSavings FundExpense Fund - 10. Multiple ChoiceA rate which is either charged (on debt) or paid (on investment accounts) for the use of moneyInterest RateSavings RateInflation RateInterest Percentage
- 11. Multiple ChoiceWhen it comes to saving money, the amount you save is determined by how much you have left at the end of the month once all of your spending is done.TrueFalse
- 12. Multiple Choice
Which of the following is not one of the three basic reasons for saving money
Large Purchases
Have money available to lend to friends
Emergency Fund
Build Wealth
- 13. Multiple ChoiceMoney set aside and left alone for a "rainy day."emergency fundsavings account
- 14. Multiple ChoiceWhen a person intentionally invests money in a place where it can earn more moneysinking fundwealth building
- 15. Multiple ChoiceWhat two things do you consider when evaluating the time value of moneytime and savingstime and interest rateinflation and interest rate
- 16. Multiple ChoiceWhy should interest earned not be a factor with your emergency fundInflation can eat up the interest earnedInterest-bearing accounts at banks earn a high rate of interest, therefore, interest is not a concernThe emergency fund is not intended to grow wealthNone of the above
- 17. Multiple ChoiceWhich of these is not a key to saving moneyFocusMaking saving a habit and a priorityYour incomeDiscipline
- 18. Multiple ChoiceUsing the sinking fund approach, how much do you have to save each month to buy a $4,800 car one year from now$400$300$275$500
- 19. Multiple ChoiceWhich of the following is a good investment option?ViaticalsMutual fundsFuturesGold
- 20. Multiple ChoiceWhich statement is true about liquidity?The less liquid the investment, the less returnThe more liquid an investment, the less returnThe more liquid an investment, the more returnNone of these
- 21. Multiple ChoiceThe benefit of diversification in your investments is:Reduced riskIncreased returnIncreased risk
- 22. Multiple ChoiceA young investor willing to take moderate risk for above-average growth would be most interested in:Real estateBondsSingle stocksMutual funds
- 23. Multiple ChoiceIn some cases, employers will match the employee contribution, but you should fund your plan whether your company matches or not. This statement refers to:401(k)Single stocksRoth IRABond funds
- 24. Multiple ChoiceEmployee benefits packages:Are non-wage compensations provided to employees in addition to their normal wages or salariesNever include retirement plansAre the same regardless of the company you work forShould not be a consideration when looking for a job
- 25. Multiple Choice
When buying and selling investments, you should not:
Learn the different types of investments
Understand basic investment strategies and identify ones that will help you reach your goals
Switch your investment strategy often, based on market conditions
Set your investment goals and consider a time frame
- 26. Multiple ChoiceA retirement plan found in nonprofit organizations such as churches, hospitals and schools.457GIC401(k)403(b)
- 27. Multiple Choicea type of mutual fund with a portfolio constructed to match or track the components of a market index, such as the Standard & Poor's 500 Index ...stockmutual fundindex fundspeculative investments
- 28. Multiple ChoiceThe act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit.investingmutual fundsavingsrule of 72
- 29. Multiple ChoiceDebt investment in which investor loans money to an entity, usually corporate or governmentalBondStockCashAnnuity
- 30. Multiple ChoiceOwnership in a publicly traded corporationCD-certificate of depositMoney MarketTreasury billStock
- 31. Multiple ChoiceProfessionally managed, diversified investment that pools resources of many investorsTreasury bondsStock indexMutual fundSaving account
- 32. Multiple ChoiceThe Rule of 72 is used to find how long an it will take forinvestments to doubledebt to doubleinterest to increase
- 33. Multiple ChoiceThe last reported price at which a security was traded on an exchange.bondstockinflationmarket price
- 34. Multiple ChoiceWhat is portfolio diversification?Spreading risk among many types of investmentsCollection of investmentsInvestments held for a long timeInvestments he
- 35. Multiple Choicethe gain or loss on an investment over a specified period, expressed as a percentage increase over the initial investment cost.maturity dateriskmutual fundrate of return
- 36. Multiple Choicean investment with a high degree of risk where the focus of the purchaser is on price fluctuations. The investor buys the tradeable good (financial instrument) in an attempt to profit from market value changes.mutual fundspeculative investmentstockbonds
- 37. Multiple Choicea legal method of minimizing or decreasing an investor's taxable income and, therefore, his or her tax liability. usually for retirementIRA, 401k, 403bmutual fundstockrisk
- 38. Multiple ChoiceAny person, company or other institution that owns at least one share of a company's stock.maturity datestockshareholderinflation
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