Saving & Investing Test Review

Front

You are opening a savings account that earns compound interest. Which compounding frequency will earn you the MOST money? Compounding 1 time a year, Compounding 4 times a year, Compounding monthly, Compounding daily

Back

Compounding daily

Front

Which of the following correctly orders the investments from LOWEST risk to HIGHEST risk?
Certificate of Deposit– Real Estate– Mutual Fund,
Real Estate – Certificate of Deposit – Mutual Fund,
Certificate of Deposit – Mutual Fund – Real Estate,
Mutual Fund – Certificate of Deposit- Real Estate

Back

Certificate of Deposit – Mutual Fund – Real Estate

Front

What is the purpose of a company issuing stock?

Back

To raise money that can be used to growth the company

Front

The measure of how long it takes your investment to double.

Back

Rule of 72

Front

When taking advantage of the time value of money, which of the following is most likely to result in the largest return? Options: Invest one large principal amount of money for a short period of time, and then make no additional investments. Invest as long as possible and at the highest interest rate possible. Invest a small amount of money for a short period of time at the highest interest rate possible. Invest at a high interest rate because interest is the only factor that affects return.

Back

Invest as long as possible and at the highest interest rate possible.

Front

Compound interest is best defined as:

Back

Earning interest on interest.

Front

Which of the following is true in regards to investing in stock? A stockholder owns a part of a company. A stockholder is able to make important decisions about the direction of the company. A stockholder will always receive a dividend. A stockholder will always receive a profit when the stock is sold.

Back

A stockholder owns a part of a company.

Front

Saving money because of a concern for losing ones’ job is an example of saving for:

Back

an emergency

Front

If you’re interested in having your money invested in many different companies, you should buy a share in:

Back

mutual funds

Front

When talking about diversifying your investments, you are referring to

Back

investing in multiple different investments.