A diversified portfolio is desirable because it:

Decreases risk by investing money in a variety of tools

Which is a feature of a certificate of deposit (CD)?

Funds deposited in CD are help for a certain length of time

Which statement is true with regard to paying taxes on investments?

Taxes are always paid on investments

When taking advantage of the time value of money,whats MOST LIKELY to result in largest return

Invest as long as possible and at highest rate possible.

Which statement is true of mutual funds ?

Mutual funds are diversified investments

Which statement BEST describes inflation?

The rise in the general level of prices

Type of debit that a company issues to investors

Brett Co-worker talks about tiered interest rate, what is this?

The amount of money he earns depends on the balance

In relation to the rate of inflation, it is BEST to have the rate of return on an investment:

Higher, to maintain purchasing power

Which statement BEST reflects the philosophy of ¨pay yourself first¨

Individual should set aside a predetermined amount of money.

The MOST common relationship between risk and return in investing can be stated as?

Higher risk indicates higher return

In relation to other options, how liquid is a savings account?

More liquid than a certificate of deposit.

Which statement is the MOST correct description of liquidity?

How quickly and easily an asset can be converted into cash.

Which correctly describes the security level of savings tools?

Secure b/c they are protected by the U.S. gov against loss

Which is NOT true with regard to investing in stock?

A stockholder will always receive a profit (stock sold)

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Personal Finance Test 5 (5.01-5.03)

22 termsStudBud Administration313 plays

Consumer and Homemaking Education.

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Questions 22

Answers

1
When you give up getting food from the vending machine to save money to achieve a goal this is
Trade-off.
Specific part of the SMART goal.
Opportunity cost.
Interest.
2
Who would Conner contact to purchase stocks w/ money he received fro his tax return?
The New York Stock Exchange
Conner should complete this transaction on his own
A real estate agent
A brokerage firm
3
A diversified portfolio is desirable because it:
Indicates an investor is a good predictor of the return
Limits investor choices to only one or two investment tools
Decreases risk by investing money in a variety of tools
Increase the risk/return ratio
4
What is an advantage for investments like, retirement and education?
Speculative investments
Tax-advantaged investments
Index funds
Tax-rated bonds
5
Which is a feature of a certificate of deposit (CD)?
Funds deposited in a CD are very liquid.
Funds deposited in a CD have tiered interest rates.
Funds deposited in a CD can be accessed via check or debit
Funds deposited in CD are help for a certain length of time
6
Which statement is true with regard to paying taxes on investments?
Taxes are often owed on profits generated from investments
Taxes do not have to be paid on earnings
Taxes only have to be paid on employer- sponsored accounts
Taxes are always paid on investments
7
When taking advantage of the time value of money,whats MOST LIKELY to result in largest return
Invest as long as possible and at highest rate possible.
Invest at highest rate b/c interest is the only factor
Invest a small amount in short time w/ highest rate.
Invest in a large amount of money, and invest in nothing.
8
Which statement is true of mutual funds ?
Mutual funds are superior purchasing to a single stock
Mutual funds are a form of real estate investment
Mutual funds are diversified investments
Mutual funds are speculative investments
9
Which statement BEST describes inflation?
The number of times something happens to money
Projected value of an investment at the end of a time frame
The uncertainly about the return on an investment
The rise in the general level of prices
10
A bond is?
A type of investment that has potential over a shot time
A type of investment that is only offered by depository
Type of debit that a company issues to investors
A share of ownership
11
Brett Co-worker talks about tiered interest rate, what is this?
The rate of interest earned increases over time
Something illegal
The amount of money he earns depends on the # of accounts
The amount of money he earns depends on the balance
12
Compound interest is BEST defined as?
Interest earned on the principal investment.
Any form of interest earned from saving or investing.
Earning interest on interest.
The effect interest has on the total return on investment.
13
In relation to the rate of inflation, it is BEST to have the rate of return on an investment:
Lower, in order to minimize risk
Higher, to maintain purchasing power
Lower, in order to minimize taxes
Higher, to minimize risk
14
Which statement BEST reflects the philosophy of ¨pay yourself first¨
Individual should save whatever is left of paycheck .
Individual should set aside a predetermined amount of money.
Individual should spend money on what they enjoy first.
Individual should pay all fixed expenses before anything.
15
Which saving tool will help you manage purchases, and is also very liquid & accessible?
Checking account
Any of the above saving tools
Money market deposit account
Certificate of deposit
16
The MOST common relationship between risk and return in investing can be stated as?
Lower risk indicates higher return
Higher risk indicates lower return
Higher risk indicates higher return
No relationship
17
In relation to other options, how liquid is a savings account?
More liquid than cash.
Less liquid than mutual funds.
More liquid than a checking account.
More liquid than a certificate of deposit.
18
Which statement is the MOST correct description of liquidity?
A measurement of how much a person owns after debts are paid
The amount of saving available.
Amount of money needed to pay for the necessities.
How quickly and easily an asset can be converted into cash.
19
Which concept is the BEST to include to show the understanding of compounding interest
Earning interest on interest.
Any form of interest earned from saving money or investing.
Interest earned on the principal investment.
The effect interest has on the total return on investment.
20
Which is a feature of money market deposit account?
The money must remain in account for a specific time period
No minimum balance requirements
Tiered interest rates
Unlimited transactions every month
21
Which correctly describes the security level of savings tools?
NONE of the above
Secure b/c they are protected by the U.S. gov against loss
Very secure b/c there are not risks involved w/ saving
NOT secure b/c they have a high risk of losing money.
22
Which is NOT true with regard to investing in stock?
Stockholders may pay different prices for the same stock
A stockholder owns a part of a company
A stockholder may or may not receive a dividend
A stockholder will always receive a profit (stock sold)

Personal Finance Test 5 (5.01-5.03) Flashcards | StudBud