Mod 4 - Investments

The rate of return is

• how much an investment gains or loses value over a period of time
• how much the bank charges you in interest when you take out a loan
• how much money you lost in an investment
• how fast your money will double in value

The basic rule of a risk-to-return relationship is that the

• lower the risk, the higher the return rate
• higher the risk, the higher the return rate
• higher the risk, the lower the return rate
• two are not related

Which one of the following types of investments has the lowest risk and lowest rate of return?

• savings bonds
• stocks
• collectibles
• real estate

Which one of the following types of investments has the highest risk and the highest potential rate of return?

• Money Market Accounts
• Stocks
• Certificates of Deposit (CDs)
• Savings Bonds

Which statement below is true about mutual funds?

• There are no fees or expenses associated with mutual funds
• Mutual funds offer guaranteed returns
• Mutual funds are convenient and professionally managed
• You can choose which stock to include in your mutual funds

The time value or money concept can best be demonstrated using which of the following?

• Pay yourself first
• Higher the risk, higher the return
• Invest early
• Buy low, sell high

One downfall of a CD or Certificate of Deposit is 

• you can overdraw the account
• there is a penalty if you cash it in early
• you have to wait at least 30 years to cash it in
• the interest rate can change

An income investment

• is less risky
• may provide a steady income
• may also be a growth investment
• all of the above

Which of the following is NOT true about growth investments?

• Growth investments involve more risk
• Growth investments usually must be sold before you will get any return on your investment
• Growth investments have less potential for big gains
• Real estate is an example of a growth investment

In the future, a dollar will most likely be worth

• less than a dollar today
• more than a dollar today
• the same as a dollar today