Financial Literacy Final Review

A key difference between saving and investing is

• Saving is for everyone, investing is for the wealthy

• Your money is insured when investing, it is not in savings

• Investing has a guaranteed return, savings does not

• Saving is for emergencies & goals, investing is for long-term wealth

Tags

CCSS.L.11-12.4C

CCSS.L.6.4C

CCSS.L.7.4C

CCSS.L.8.4C

CCSS.L.9-10.4C

Why is compound interest more beneficial than simple interest?(two answers)

• Your money grows faster when it is compounded

• You earn interest on your interest

• Fees for compound interest are greater than simple interest

• Compound interest is hard to calculate, so fewer use it

Which would be considered the highest risk investment type?

• Stock

• Mutual Fund

• Bond

• Money Market Account

The relationship between risk and return can be stated as

• Higher risk indicates higher return

• Higher risk indicates lower return

• Lower risk indicates higher return

• No relationship exists between risk and return

How can you make money on stocks? (two answers)

• A capital gain

• Interest

• Dividends

• Holding the stock at least 3 years

A diversified portfolio is desirable because

• It limits investment choice

• It's a good predictor on rate of return

• It increases risk and return

• It decreases risk

Why is it important to start investing as soon as possible?

• You take less risk when you are young, so money will be safe

• You have more time for your money to compound

• Investing is an easy way to make quick money

• Fees on investments are cheaper when you are younger

True or False: Investing in a diversified portfolio of stocks guarantees you will not lose money.

• True

• False

How do wages and salary differ?

• Wages describe what you earn on an annual basis

• Salary describes what you earn on an annual basis

• Wages mean you have a standard amount in each paycheck

• Salaried employees are likely to be paid for overtime

Which of the following are TRUE about gross income and net income? (2 answers)

• Gross income and net income are the same

• Net income is sometimes called "take home pay"

• Gross income is the total amount earned before deductions

• Net income is the total amount earned before deductions