Saving and Investing

Which of the following is a good reason to have a financial reserve that's larger than normal?

• You would not be able to find another job quickly if you lost yours.

• You have a large monthly car payment.

• You have mostly discretionary expenses.

• Your income is fairly predictable.

What is compounding interest?

• interest that's not calculated on a regular basis

• interest that doubles the principal of an account

• interest gained only on the principal of an account

• interest that's added to the principal of an account

What is opportunity cost?

• the principal in an investment account

• the total amount of investments in a portfolio

• the value of an investment opportunity you pass up in order to take another investment opportunity

• the value of an investment opportunity when it's compared with all the other investments you've made in the past

What is a volatile investment?

• an investment that can change quickly without warning

• an investment that is fairly low risk

• an investment that requires a high volume of investors

• an investment that gains value slowly over time

Which portion would not be part of an investment portfolio?

• a savings account

• commodities fund

• a savings 529 plan

• equity investments in a company

When is your risk tolerance lowest?

• when you are closest to needing the money you invested

• when you are concerned about the diversity of your investment portfolio

• when you are an inexperienced investor

• when you first make the investment

What piece of information is most helpful when you're comparing investments?

• the ROI percentage

• the ROI dollar amounts

• the total return dollar amounts

• the initial investment amounts

How does an equity investor make money?

• depositing money in compounding accounts

• lending money and charging interest

• selling an investment for more than they paid for it

• selling many investments at the same time

What is a stock?

• a partial ownership in a company

• a group of real estate investments

• a regular payment a company issues to investors

• a government investment

Which policy is a way the SEC protects investors?

• guaranteeing the value of certain stocks

• insuring the amounts of people's investments

• requiring companies to disclose financial information

• helping investors diversify their portfolios