Unit 1.20 review questions

Which of the following is a reason to purchase bonds?

• To receive a specific, reliable return on your investment

• To make sure you'll be able to withdraw the money quickly

• To guarantee a high rate of return

• To invest in a specific business or company

Which of the following is a risk of investing in a privately held company, instead of a publicly held company?

• The investment isn't regulated by the SEC.

• The company might not have potential for growth.

• The price of the stock can change quickly.

• The investment probably won't have a high reward.

Which example is an investment commodity?

• shares in a company

• microfinancing

• a rare painting

• steel

Which of the following types of accounts offers tax deferred investing for retirement?

• an index fund

• a 401(k) plan

• a mutual fund

• a prepaid 529 plan

Which option allows you to pool your money and invest in a portfolio with other investors? (Select the best answer.)

• a 529 plan

• a 401(k) plan

• a mutual fund

• an IRA account

Which type of investment income happens when a company shares its profits with investors?

• dividends

• capital gain

• interest

• rent

A ___________ is an amount of money you've set aside in case of an emergency. (Select the best answer.)

• Will

• Premium

• Risk Policy

• Reserve

Which of the following is a financial goal? (Select the best answer.)

• Becoming a banker

• Renting an apartment

• Graduating from high school

• Learning to play the violin

What is net pay? (Select the best answer.)

• The amount of money an employee earns divided by the number of hours worked

• The total amount of taxes an employee owes each year

• The full amount of wages or salary an employer plays an employee

• The amount of money that gets paid to an employee after payroll withholding

What is a discretionary expense?

• An essential expense that satisfies a need

• An expense that does not support your valuews

• An expense that supports your values

• An expense that satisfies a want but is not essential