Personal Finance

Why would an investor choose an investment with greater risk?

• Higher potential rate of return

• A mutual fund is not insured

• increases financial resources for business investment

• provide access to capital for people and businesses

Why is investing in a mutual fund considered to be a higher risk investment than a money market fund?

• Higher potential rate of return

• A mutual fund is not insured

• increases financial resources for business investment

• provide access to capital for people and businesses

How does an increase in the savings rate help the economy?

• Higher potential rate of return

• A mutual fund is not insured

• increases financial resources for business investment

• provide access to capital for people and businesses

Why are financial institutions important to economic growth?

• Higher potential rate of return

• A mutual fund is not insured

• increases financial resources for business investment

• provide access to capital for people and businesses

A line of credit that can be used repeatedly within a certain credit limit is called ________-ended credit.

• high

• closed

• open

• low

What is one example of the above type of credit?

• Credit card

• Debit card

• Mortgage card

• Get out of jail card

What type of retirement account is considered the most secure?

• credit cards

• Tax

• Cash

• IRA (individual retirement account)

Which retirement account is usually offered by your employer?

• credit cards

• Tax

• 401k

• IRA

What are the four steps to starting a savings program?

• risk of decline in value of investment, risk of lost of purchasing power, risk of failure or default, risk of illiquidity

• it’s a legal requirement, coverage of unexpected expenses, some life insurance plans build equity to borrow against, possible tax credit to cover insurance premium

• set goals, study income and expenditures compared to goals, investigate investment opportunities, create a plan to achieve those goals

• huge drop in credit score, lack of future credit options, could loan personal property

List four risks of investing in the stock market

• risk of decline in value of investment, risk of lost of purchasing power, risk of failure or default, risk of illiquidity

• it’s a legal requirement, coverage of unexpected expenses, some life insurance plans build equity to borrow against, possible tax credit to cover insurance premium

• set goals, study income and expenditures compared to goals, investigate investment opportunities, create a plan to achieve those goals

• huge drop in credit score, lack of future credit options, could loan personal property