Unit 5 Objective Review

What is inflation?

• The rise in the general level of prices

• The uncertainty the return on an investment will

  deviate from what is expected

• The number of times something happens to money

• The projected value of an investment at the end of a

  specified period of time

The relationship between risk and return can be stated as:

• Higher risk indicates lower return

• Higher risk indicates higher return

• Lower risk indicates lower return

• No relationship exists between risk and return

A financial plan would not be complete without both savings

and investments

• True

• False

Investments are more liquid than savings tools.

• True

• False

With some investments, you may have to wait a long time to

access funds.

• True

• False

Which has the potential to earn higher returns?

• Savings

• Investing

The profit or income generated by saving and investing is known as :

• debt

• inflation

• return

• risk

What is the percentage (%) of net income that financial experts recommend you commit to saving and investing as part of your spending plan?

• 10%

• 15%

• 20%

• 8%

When a goal has been set to save $100.00 a month for an emergency fund of $2,000.00, giving up food from the vending machine to achieve that goal is the:

• opportunity cost.

• interest

• specific part of the SMART goal.

• trade-off.

Elliot’s stock broker is suggesting that he consider investing in a diversified portfolio. A diversified portfolio is desirable because it:

• increases the risk/return ratio.

• limits investor choices to only one or two investment tools.

• indicates an investor is a good predictor of the return an investment will have.

• decreases risk by investing money in a variety of investment tools.