Saving & Investing Test Review

You are opening a savings account that earns compound interest. Which compounding frequency will earn you the MOST money?

• Compounding 1 time a year

• Compounding 4 times a year

• Compounding monthly

• Compounding daily

Which of the following correctly orders the investments from LOWEST risk to HIGHEST risk?

• Certificate of Deposit– Real Estate– Mutual Fund

• Real Estate – Certificate of Deposit – Mutual Fund

• Certificate of Deposit – Mutual Fund – Real Estate

• Mutual Fund – Certificate of Deposit- Real Estate

What is the purpose of a company issuing stock?

• To grow equity interests that encourage diversification

• To raise money that can be used to growth the company

• To increase the influence of the current owners of the company

• To exempt the company from paying taxes

The measure of how long it takes your investment to double.

• Compound Interest

• Rule of 72

• Simple Interest

• Interest Rate

When taking advantage of the time value of money, which of the following is most likely to result in the largest return?

• Invest one large principal amount of money for a short period of time, and then make no additional investments.

• Invest as long as possible and at the highest interest rate possible.

• Invest a small amount of money for a short period of time at the highest interest rate possible.

• Invest at a high interest rate because interest is the only factor that affects return.

Compound interest is best defined as:

• Interest earned on the principal investment.

• Any form of interest earned from saving or investing.

• Earning interest on interest.

• The effect interest has on the total return on investment.

Which of the following is true in regards to investing in stock?

• A stockholder owns a part of a company.

• A stockholder is able to make important decisions about the direction of the company.

• A stockholder will always receive a dividend.

• A stockholder will always receive a profit when the stock is sold.

Saving money because of a concern for losing ones’ job is an example of saving for:

• a goal

• a particular purchase

• retirement

• an emergency

If you’re interested in having your money invested in many different companies, you should buy a share in:

• a bond

• real estate

• a large company

• mutual funds

When talking about diversifying your investments, you are referring to

• putting all your money in the lowest risk investment possible.

• purchasing speculative investments.

• loaning your money to the government.

• investing in multiple different investments.