A share of a company's profits distributed to shareholders

What is a mutual fund?

An investment pooling $ from many investors to invest in many investments

What is a credit score used for?

To determine eligibility for a mortgage or loan

What is the purpose of a 401(k) plan?

To provide retirement savings for employees

What is the opportunity cost of a decision?

The next best alternative foregone

Which of the following is a disadvantage of using credit cards?

Risk of overspending and accruing debt

What is compound interest?

Interest calculated on the initial principal plus any accumulated interest

What is the difference between a traditional IRA and a Roth IRA?

Contributions to a Roth IRA are tax-deductible

What is diversification in investing?

Spreading investments across different assets or securities

What is the purpose of insurance?

To protect against the risk of loss or damage to property or assets

Which of the following is a characteristic of a bear market?

Falling stock prices and investor pessimism

What is a stock exchange?

An electronic platform where stocks are bought and sold

What is the difference between a stock and a bond?

Stocks represent ownership in a company, while bonds represent debt

What is the role of a stockbroker?

To facilitate the buying and selling of stocks on behalf of clients

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Spring 2024 Econ Final Exam Review #2

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Questions 20

Answers

1
What is a dividend?
A type of bond issued by corporations
A share of a company's profits distributed to shareholders
A payment made by a borrower to a lender
An investment strategy focused on long-term growth
2
What is a mutual fund?
An investment pooling $ from many investors to invest in many investments
A government agency that regulates financial markets
A type of retirement account
A loan provided by a bank to finance the purchase of a home
3
What is a credit score used for?
To assess the risk of investing in the stock market
To determine eligibility for government assistance program
To determine eligibility for a mortgage or loan
To calculate income tax owed to the government
4
What is the purpose of a 401(k) plan?
To provide disability insurance for employees
To provide unemployment benefits for employees
To provide health insurance coverage for employees
To provide retirement savings for employees
5
What is the opportunity cost of a decision?
The total monetary cost incurred
The total resources used
The total benefits received
The next best alternative foregone
6
Which of the following is NOT a characteristic of a monopolistic competition market structure?
Price takers
Differentiated products
Many buyers and sellers
Some control over price
7
Which of the following is a disadvantage of using credit cards?
Protection against fraud and unauthorized transactions
Risk of overspending and accruing debt
Ability to earn rewards and cashback
Convenience and ease of use
8
What is compound interest?
Interest calculated only on the initial principal
Interest calculated annually
Interest calculated at a fixed rate
Interest calculated on the initial principal plus any accumulated interest
9
Which of the following is NOT a characteristic of a certificate of deposit (CD)?
FDIC insurance
Fixed interest rate
Low liquidity
High risk
10
What is the difference between a traditional IRA and a Roth IRA?
Contributions to a traditional IRA are tax-deductible
Withdrawals from a Roth IRA are tax-fre
Withdrawals from a traditional IRA are tax-free
Contributions to a Roth IRA are tax-deductible
11
What is diversification in investing?
Spreading investments across different assets or securities
Investing in a single asset or security
Borrowing money to invest in securities
Buying and selling securities frequently
12
What is the purpose of insurance?
To regulate financial markets and protect investor
To provide loans to individuals and businesse
To protect against the risk of loss or damage to property or assets
To generate income through investment activities
13
Which of the following is a characteristic of a bear market?
Rising stock prices and investor optimism
Stable stock prices and low trading volume
High inflation and low interest rates
Falling stock prices and investor pessimism
14
What is the purpose of a budget?
To regulate financial market
To invest in the stock market
To track income and expenses
To reduce taxes owed to the government
15
What does ROI stand for?
Return on Investment
Revenue from Operation
Risk of Investment
Rate of Inflation
16
What is a stock exchange?
An electronic platform where stocks are bought and sold
A government agency that regulates financial markets
A physical location where goods are bought and sold
A marketplace where currencies are traded
17
What is the difference between a stock and a bond?
Stocks have a fixed maturity date, while bonds have no maturity date
Stocks are less risky than bonds
Stocks represent ownership in a company, while bonds represent debt
Stocks pay interest to investors, while bonds pay dividends
18
Which of the following is a type of insurance that provides coverage for medical expenses?
Health insurance
Life insurance
Home insurance
Auto insuranc
19
What is the role of a stockbroker?
To manage investment portfolios for clients
To provide loans to individuals and businesses
To facilitate the buying and selling of stocks on behalf of clients
To regulate financial markets and protect investors
20
Which of the following is a type of tax-advantaged college savings plan?
HSA
529 plan
Roth IRA
401(k)

Spring 2024 Econ Final Exam Review #2 Flashcards | StudBud