Personal Finance and Economics Money and Investing Quiz Hudspeth

The Rule of 72 is used to find how long an it will take for

• investments to double
• debt to double
• interest to increase

The chance of loss.

• Stock
• Reward
• Risk
• Real Estate

Justin wants to go to spend a month traveling Europe next summer but doesn’t have the money to do so. He’s thinking of investing the $700 he currently has saved in stock in his favorite restaurant in hopes of earning the money for the vacation. Why shouldn’t he do that?

• Investing in one company’s stock is quite risky.
• Investing your whole savings in the stock market is a bad financial move.
• One year probably isn’t enough time for one stock to turn $700 into a month’s vacation.
• All of the above

Which of the following statements are true?

• Between cash, stocks, and bonds, bonds are typically considered the riskiest.
• Stocks are the riskiest investments out there.
• Putting money into a savings account with interest is the ideal way for a young adult to invest.
• Historically, stocks have had far greater annual returns than cash, government bonds, and savings

The most common relationship between risk and return in investing can be stated as:

• higher risk indicates lower return.
• higher risk indicates higher return.
• lower risk indicates higher return.
• no relationship exists between risk and return.

Which is not true with regard to investing in stock?

• A stockholder may or may not receive a dividend.
• A stockholder owns a part of a company.
• Depending upon the current market price, stockholders may pay different prices for the same stock.
• A stockholder will always receive a profit when the stock is sold.

A prolonged period of falling stock prices and a general feeling of investor pessimism:

• Animal market

• Bear market

• Bull market

• Wolf market

A prolonged period of rising stock prices and a general feeling of investor optimism:

• Animal market

• Bear market

• Bull market

• Wolf market

The spreading of risk among many types of investments:

• Asset spread

• Balancing

• Diversification

• Valuation

Stocks of large, well-established corporations with a solid record of profitability:

• Blue-chip stocks

• Gradient stocks

• Par stocks

• Stock splits