Personal Finance Chapter 8

The benefit of diversification in your investments is:

• Reduced risk

• Increased return

• Reduced tax liability

• Increased risk

A reason that people need to save and invest is to:

• Enable their money to make money

• Increase the money supply

• Be able to get anything they want

• Have an opportunity to talk with financial service providers

Which of the following is a good investment option?

• Gold

• Viaticals

• Mutual Funds

• Futures

Savings accounts and money-market accounts are most appropriate for:

• Long-term investments like retirement

• Earning a high rate of return

• Emergency funds and short-term goals

• Savings accounts and money-market accounts should be avoided since they carry high risk

Long-term investments, properly diversified, include the following mutual funds:

• Growth, balanced, international, bond

• Growth, growth and income, international, aggressive growth

• International, gond, aggressive growth, growth

• Growth, growth and income, bond, aggressive growth

Company X's board of directors has decided to issue a portion of its earnings to its shareholders. If you won stock in Company X, you can expect to receive a(n):

• Investment

• Dividend

• Buy-out

• Yield

Which statement is true about liquidity?

• The more liquid an investment, the more return

• The less liquid the investment, the less return

• The more liquid an investment, the less return

• Both A and B

A savings account sold by an insurance company, designed to provide payments to the holder at specified intervals, usually after retirement.

• Money market

• Mutual fund

• Single stock

• Annuity

Employee benefits packages:

• Should not be a consideration when looking for a job

• Never include retirement plans

• Are the same regardless of the company you work for

• Are non-wage compensations provided to employees in addition to their normal wages or salaries

When buying and selling investments, you should not:

• Switch your investment strategy often, based on market conditions

• Understand basic investment strategies and identify ones that will help you reach your goals

• Set your investment goals and consider a time frame

• Learn the different types of investments