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- 1. Multiple Choice
What is one advantage of starting to invest as early as possible?
You’ll get a discount on any fees for funds you invest in.
You have access to more funds.
Your money has more time to grow.
You’re eligible for higher interest rates the younger you are.
- 2. Multiple Choice
How does simple interest differ from compound interest?
Simple interest is calculated on principal alone; compound interest is calculated on the principal as well as the interest you’ve already earned.
Simple interest rates are between 1-5% while compound interest rates are over 5%.
Simple interest is calculated on the principal as well as the interest you’ve already earned; compound interest is calculated on principal alone.
You earn simple interest in a savings account and compound interest on an investment.
- 3. Multiple Choice
A savings account is useful for all of the following purposes EXCEPT…
Putting aside money for retirement
Building an emergency fund
Saving for a new car
Funding a future vacation
- 4. Multiple Choice
How is wealth defined?How much money you have in your Checking and Saving accountsDebts - AssetsAll assets, including money in the bank + retirmentAssets - Debts - 5. Multiple Choice
Which of the following is FALSE about saving and investing? (hint: choose 2 correct answers)
Saving doesn't outpace inflation; investing usually does
Both saving and investing generally have low returns
Saving is for short-term; investing is for the long-term
Saving has more risk; investing has less risk
- 6. Multiple ChoiceWhich is NOT a typical goal for a savings account?To create an emergency fundTo pay for higher educationTo save for a new carTo buy groceries for this week
- 7. Multiple ChoiceWhat is a general rule of thumb on how much you should save?5% of your income10% of your income20% of your income30% of your income
- 8. Multiple ChoiceWhat is a good strategy to help you save?1st, spend money on all expenses; put the rest into savingTap into your savings on a regular basis to purchase small items, like snacksPay yourself first - set aside money for savings each monthKeep your spending and saving money together in 1 account
- 9. Multiple ChoiceHow is compound interest different than simple interest?It is simple interest - interest earned on that interestIt is double the simple interest earned on an investmentIt is simple interest + interest earned on that interestIt's not different; they are one and the same
- 10. Multiple Choice
Why is compound interest more beneficial than simple interest? (hint: choose 2 correct answers)
Your money grows faster when it is compounded
You earn interest on your interest
Fees for compound interest are greater than simple interest
Compound interest is hard to calculate, so fewer use it
- 11. Multiple Choice
The relationship between risk and return can be stated as
Higher risk indicates higher return
Higher risk indicates lower return
Lower risk indicates higher return
No relationship exists between risk and return
- 12. Multiple Choice
Why is it important to start investing as soon as possible?
You take less risk when you are young, so money will be safe
You have more time for your money to compound
Investing is an easy way to make quick money
Fees on investments are cheaper when you are younger
- 13. Multiple Choice
A key difference between saving and investing is
Saving is for everyone, investing is for the wealthy
Your money is insured when investing, it is not in savings
Investing has a guaranteed return, savings does not
Saving is for emergencies & goals, investing is for long-term wealth
- 14. Multiple Choice
What is a key difference between saving and investing?
Saving is for long-term goals; investing is for short-term goals
Saving earns a much higher rate of return than investing your money
Saving guarantees you the money you put away while investing has no guarantees.
Saving earns compound interest while investing earns simple interest
- 15. Multiple ChoiceRiley invested $1,000 in savings bonds. If the bonds earn 6.75% interest compounded semi-annually, how much total will Riley earn in 15 years?$1,584.62$2,651.39$2,706.86$1,825.10
- 16. Multiple Choice
Approximately what interest rate would be needed in order to grow Christian's investment of $1400 to $2500 in 10 years if the interest was compound monthly?
5.96%
5.84%
5.81%
5.88%
- 17. Multiple Choice
Treasure won $3,000 from a radio contest. If she puts this money in a bank account that earns 2.9% interest compounded quarterly, how much total will she earn in 10 years?
$4915.59
$3933.28
$2979.81
$4005.09
- 18. Multiple Choice
The simple interest formula is I=Prt. The P represents the principle. The principle is ___________________.
the amount of money borrowed or deposited
the percent interest for his year
the amount taxed
the amount the bank owes you for being a customer at their bank
- 19. Multiple ChoiceWhat is the formula for simple interest?A=P(1+r)tI=PrtI=P(1+r)tA=Prt
- 20. Multiple Choice
What is a key difference between saving and investing?
Saving is for long-term goals; investing is for short-term goals
Saving earns a much higher rate of return than investing your money
Saving guarantees you the money you put away while investing has no guarantees.
Saving earns compound interest while investing earns simple interest
- 21. Multiple Choice
What is inflation?
Increase general price level of goods and services
Increase price level from one private organisation
Decrease general price level of goods
Increase general price level of services
- 22. Multiple Choice
A savings account is useful for all of the following purposes EXCEPT…
Putting aside money for retirement
Building an emergency fund
Saving for a new car
Funding a future vacation
- 23. Multiple Choice
What is one advantage of starting to invest as early as possible?
You’ll get a discount on any fees for funds you invest in.
You have access to more funds.
Your money has more time to grow.
You’re eligible for higher interest rates the younger you are.
- 24. Multiple ChoiceJerry borrowed $4,000 for 5 years at 6% simple interest rate. How much interest is that?$800$1,000$1,200$1,500
- 25. Multiple Choice
How does a mutual fund differ from an index fund?
Mutual funds are actively managed by a professional while index funds are not.
Mutual funds typically have lower fees than index funds.
Mutual funds group the stocks in their funds together while index funds do not.
Mutual funds are passively managed while index funds are actively managed.
- 26. Multiple Choice
Which of the following statements about having a financial planner manage your investment portfolio is TRUE?
The manager will charge fees that will decrease the profits you gain.
Having a manager often costs less than managing the portfolio yourself.
You don’t have a say in how you want to manage your portfolio.
Financial planners are guaranteed to beat the market all the time.
- 27. Multiple Choice
Which of the following is TRUE about owning a share of stock?
You have to return the share of company you own typically after 5 years, otherwise, you pay a penalty fee each year.
The value of a share is based on the number of investors in a company.
Owning a share means you own a percentage of the company.
Companies lose significant amounts of money every time someone buys a share.
- 28. Multiple Choice
How do stocks and bonds differ?
Stocks are good for income while bonds are good for long-term growth.
Stocks may help you protect your money from inflation while bonds may be more susceptible to losing their value over time due to inflation.
Stocks are low risk while bonds are high risk.
Stocks are loans you give out to corporations and get paid back with interest; bonds are shares of a company that you own.
- 29. Multiple Choice
Which of the following is NOT a stock index?
DOW JONES
S & P 500
NASDAQ COMPOSITE
P/E RATIO
- 30. Multiple Choice
What is the primary reason for a company to issue stock?
The stocks help investors earn a higher rate of return
To raise money to grow the company
To distribute the risk of bankruptcy across more investors
To increase greater awareness of the company
- 31. Multiple Choice
Relationship between risk and return in investing can be stated as:
higher the risk indicates lower potential return
higher risk indicates higher potential return
lower risk indicates higher potential return
- 32. Multiple Choice
Andy earned $300 on a $1000 investment. What is his current ROI (return on investment)?
2%
3%
30%
70%
- 33. Multiple ChoiceThis is considered an IOU and the higher the interest rate on this, the more risky it isBondT-billMoney marketStocks
- 34. Multiple Choice
What is the differences between stocks and bonds?
They are both investments.
A stock is what corn grows on, and a bond gets you out of jail.
Stock represents ownership, and bonds represents your word.
A stock represents ownership, and bonds represents a loan.
- 35. Multiple ChoiceA mutual fund isAn investment in a diversified group of stocksThe money left over when reinvested into the companyAn account that guarantees a fixed rate of returnExclusively for retirement accounts
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