Which statement most accurately describes the risk involved with a mutual fund?

A mutual fund has a diversified portfolio, so the risk is spread out.

What are the main differences between a bond and a money market fund?

Bonds are long-term investments money markets are short-term investments

Look at the pyramid. What is the most likely reason that a person would choose the middle level of investments?

The person is looking to make money and willing to make a small risk.

What are the advantages of dollar cost averaging?

It's an approach that improves the odds of stock invt w/ no rash decisions.

What can cause a savings account to lose value over time?

when the inflation rate is greater than the interest rate

How does a stock owner earn money on that stock?

Money is earned if the stock price goes up.

Which statement summarizes best how to approach risk while investing?

People should risk what they feel comfortable risking while investing.

What would you do if you're willing to wait for your investment to mature but are worried about losing your money?

A relatively safe investment is a government-issued bond

Why do people have trouble saving their money?

Saving is a habit that takes discipline.

What can you infer about stocks from this bar graph?

Stocks are risky but can earn great profits.

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Accumulating Wealth

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Answers

1
Which statement most accurately describes the risk involved with a mutual fund?
A mutual fund is low risk because a bank pays you interest on your money.
A mutual fund is low risk because it involves investing in the US govt.
A mutual fund’s value is stable, so the risk is low.
A mutual fund has a diversified portfolio, so the risk is spread out.
2
What are the main differences between a bond and a money market fund?
Bonds invest in collectibles; money market funds involve the stock market
Bonds involve the short-term ; money market funds are long-term
Bonds are safe investments and money market funds are risky.
Bonds are long-term investments money markets are short-term investments
3
Look at the pyramid. What is the most likely reason that a person would choose the middle level of investments?
The person is looking to make money and willing to make a small risk.
The person is unwilling to take risks.
The person needs to make money quickly, regardless of risk.
The person has a small income and a large family.
4
What are the advantages of dollar cost averaging?
It's an approach that improves the odds of stock invt w/ no rash decisions.
It guarantees stock market gains and eliminates losses.
It's a diversified portfolio of many stocks and bonds; minimal risk
It does not get taxed, so the profits are larger.
5
What can cause a savings account to lose value over time?
when the principal is greater than the interest rate
when the interest rate is compounded
when the inflation rate is greater than the interest rate
when the interest rate is greater than the inflation rate
6
How does a stock owner earn money on that stock?
Money is earned if the stock price goes down.
Money is earned if the stock price goes up.
Money is earned if the stock price rises higher than inflation.
Money is earned when the stock matures in 5-30 years.
7
Which statement summarizes best how to approach risk while investing?
People should not expose themselves to risk while investing.
People should be willing to risk 10-15% of their income on investments.
People should risk what they feel comfortable risking while investing.
Without a moderate to high risk, investing will not earn a profit.
8
What would you do if you're willing to wait for your investment to mature but are worried about losing your money?
A relatively safe investment is a government-issued bond
A relatively safe investment is a stamp collection.
A relatively safe investment is a used car
A relatively safe investment is stock in a new company
9
Why do people have trouble saving their money?
The government penalizes people for saving.
There are too many fees involved with saving.
Phishing makes saving impossible.
Saving is a habit that takes discipline.
10
What can you infer about stocks from this bar graph?
Stocks bring in a low return on investment.
Stocks perform poorly each year.
Stocks are risky but can earn great profits.
Stocks are dependable.

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