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NGPF Unit 5 Financial Algebra: Investing Flashcards | StudBud
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NGPF Unit 5 Financial Algebra: Investing
NGPF Unit 5 Financial Algebra: Investing
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Answers
1
A company's assests are depreciation 4% per year. What is their decay factor?
.4
.04
.96
1.04
2
What is one way to NOT maximize investment returns?
Use diversification to minimize risk
Make frequent trades and withdraw your short-term earnings
Invest early for the long term
Reinvest earnings
3
A divident is the difference between the purchase price and the selling price of a stock.
True
False
4
Exponential or Linear: You have $500 in a savings account that earns 0.5% annual interest.
Linear
Exponential
5
What is the historical rate of inflation per year?
-0.33%
15%
2%
6
Exponential or Linear?
Exponential
Linear
7
What does it mean to have an investing portfolio that is diversified?
Never buying the same stock more than once
Using a variety of sources to do research on what stocks to buy
Your investments are different from those of your friends and family
Investing in different assets to spread out risk to different markets
8
Exponential or Linear?
Exponential
Linear
9
Find the total return on an investment that started at $12,000 and ended at $31,839.57.
1.65%
165%
19839%
19(
10
A divident is a payment a company makes periodically to owners of its stock.
False
True
11
Exponential or Linear?
Exponential
Linear
12
Bonds have lower returns and lower risk than stocks.
False
True
13
Goal of $10,000 after 20 years with an investment account that has a growth factor of 1.07. What should you invest now?
1.07=10000\left(b\right)^{20}
10000=a\left(1.07\right)^{20}
y=10000\left(.09\right)^{20}
y=10000\left(1.07\right)^{20}
14
When it comes to investing in the stock market, which of the following statments is TRUE?
The whole value can go up even if some stock values go down
It is easy to make money by timing the market to buy/sell stocks
Wait until retirement age to begin investing in the stock market.
There is little to no risk to investing in the stock market.
15
You have $500 in a savings account that earns 0.5% interest annually. What will happen to the purchasing power over time
Her purchasing power will INCREASE (interest>inflation)
Her purchasing power will DECREASE (interest<inflation)
16
A stock investment has the formula y=12000\left(1.05\right)^x (x=years). Find the total balance after 10 years.
$12,000
$13,547.64
$19,546.74
$31,839.57
17
What is the growth factor of the function represented by this table?
1.05
0.05
2.5
50
18
What is the danger of cash checkers and pay day loans?
You can end up owing more than you took the loan out for!
High interest rates
Fees for cashing checks (it's free with a checking account at a bank!)
Compound interest working against the client and rolling loans
