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Saving and Investing
Saving and Investing
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Answers
1
Inflation is
uncertaintyabout the return on an investmentv
numberof times something happens to money
rise in the general level of prices
projectedvalue of an investment
2
What risk is there in a savings tool?
Some risk but insured by government
Too Risky
None
Very
3
a teired account is one that
interest rate increases over time
is illegal
has a higher balance = higher interest rate
the more accounts in the bank the higher the interest rate
4
The largest return when working with time value of money is by
investing a large priniciple one time
investing for short time at highest interest rate
investing as long as possible at the highest rate possible
investing at a high interest rate only
5
To purchase a stock you contact
The New York Stock Exchange
complete this transaction on his own
A real estate agent
A brokerage firm
6
Which of the following is not true inregards to investing in stock?
stockholdersmay pay different prices for the same stock
Astockholder will always receive a profit
Astockholder may or may not receive a dividend
Astockholder owns a part of a company
7
Which statement is TRUE of mutual funds?
aform of real estate investment
aresuperior to purchasing a single stock
speculativeinvestments
diversifiedinvestments
8
These have tax benefits:
Tax rated bonds
Index funds
Speculative investments
Tax‐advantagedinvestements
9
Which is true?
No relationship exists between risk andreturn
higher risk indicates higher return
lower risk indicates higher return
higher risk indicates lower return
10
Which one is the second most liquid?
CD
Checking Account
Money Market Account
Savings Account
11
Liquidity is:
amount of savings available
how much a person owns after debt
How quickly and easily an asset can be converted to cash
amount needed to pay for necessities
12
A bond is:
investmentthat is only offered by depository institutions
investment with the potential for significant fluctuations
Ashare of ownership in a company
Atype of debt that a company issues
13
Itis best to have the rate of return on an investment __________ than the rate ofinflation
Lower, in order to minimize taxes
a. Higher, to minimize risk
Higher, to maintain purchasing power
Lower,in order to minimize risk
14
simple interest is best defined as
interest earned from saving and investing
earning interest on interest
interest on prinicple investment
effect of investment
15
Adiversified portfolio is desirable because it:
increases the risk/return ratio
decreasesrisk
indicatesan investor is a good predictor
limitsinvestors choices
16
Which one is held for a specific amount of time and typically is held longer?
CD
Checking account
Savings Account
Money Market Account
17
Which of the following statements istrue in regards to paying taxes on investments?
Taxesare often owed on profits
taxesdo not have to be paid on earnings
none of the above
Taxesonly have to be paid on employer‐sponsored investment
18
which pertains to a money market deposit account?
tiered interest rate
Highest interest rate
very liquid
held for a specified time period
19
Compound interest is
effect of interest on saving and investments
interest earned from saving and investing
interest on principle
earning interest on interest
20
Giving up something to achieve a goal is
trade off
smart goal
interest
opportunity cost
21
Pay yourself first is
spending on items you enjoy in life before bills
saving money after paying bills
paying yourself is savings first before bills
pay all fixed expenses before flexible
