Personal Finance Unit 4 Investments

Bank savings accounts are best for _____ term purchases or emergencies.

• long

• short

• mid to long

• retirement

Robo-advising uses:

• high tech computer systems

• human customer service reps

• dice

• a lottery system

Compound interest is more advantageous than simple interest because:

• Compound interest is harder to calculate, you so get paid more for your efforts.

• Compound interest has lower fees than simple intterest.

• Compound interest means you are paid interest on interest already earned.

• Compound interest means you have a robot managing your money.

When investing in stocks, you should expect that...

• Stock prices are easy to predict.

• Investing in one stock is better than investing in several.

• Unforeseen events can have a dramatic impact on stock prices.

• If you read a good article about a stock, you should invest in that stock.

If you buy 10 shares of a stock at a cost of $20 per share and sell those 10 shares the next month for $30 per share, how much is your gain or loss?

• Loss of $50

• Loss of $100

• Loss of $200

• Gain of $100

What is the relationship between risk and returns?

• The higher the risk, the higher the expected return.

• The lower the risk, the higher the expected return.

• The higher the risk, the lower the expected return.

• There is no relationship between risk and return.

Why is it a good idea to diversity your investment portfolio?

• Diversification helps reduce risk.

• If you diversify, you are guaranteed high returns.

• If you tell your fund manager you want to diversify, you won't be charged a fee.

• Diversification places your investments more at risk.

Which of the following is NOT a characteristic of a bond?

• A bond invests in a municipal government or organization.

• You are paid a coupon rate (interest rate) on a bond.

• At maturity, you receive ALL of your principal investment back.

• You are considered part owner in a company when you invest in a bond.

How do you make money when you invest in stocks?

• You sell the stock for less than you bought it for.

• You sell the stock for more than you bought it for.

• If the market crashes

• When the company goes bankrupt

What is a disadvantage of a robo-adviser?

• You are charged higher fees for robo-advisers.

• You don't have any input as to how your money is invested.

• You may not be able to get advice from a human financial adviser.

• You have to go on a waitlist to be accepted by robo-advising companies.