Investing Unit Test

A key difference between saving and investing is

• Saving is for everyone, investing is for the wealthy

• Your money is insured when investing, it is not in savings

• Investing has a guaranteed return, savings does not

• Saving is for emergencies & goals, investing is for long-term wealth

Tags

CCSS.L.11-12.4C

CCSS.L.6.4C

CCSS.L.7.4C

CCSS.L.8.4C

CCSS.L.9-10.4C

Why is compound interest more beneficial than simple interest? (hint: choose 2 correct answers)

• Your money grows faster when it is compounded

• You earn interest on your interest

• Fees for compound interest are greater than simple interest

• Compound interest is hard to calculate, so fewer use it

Which would be considered the highest risk investment type?

• Stock

• Mutual Fund

• Bond

• Money Market Account

The relationship between risk and return can be stated as

• Higher risk indicates higher return

• Higher risk indicates lower return

• Lower risk indicates higher return

• No relationship exists between risk and return

Which is NOT a stock market index?

• New York Stock Exchange

• Dow Jones Industrial Average

• S&P 500

• Nasdaq

How can you make money on stocks? (hint: choose 2 correct answers)

• A capital gain

• Interest

• Dividends

• Holding the stock at least 3 years

Andy earned $300 on a $1000 investment. What is his current ROI (return on investment)?

• 2%

• 3%

• 30%

• 70%

Which is true about Initial Public Offerings (IPOs)? (hint: choose 3 correct answers)

• IPOs occur when a private company becomes publicly traded

• All companies file an IPO

• The value of an IPO can be difficult to measure

• When an IPO occurs, a company raises money to grow the business

A diversified portfolio is desirable because

• It limits investment choice

• It's a good predictor on rate of return

• It increases risk and return

• It decreases risk

Which of the following accurately describes asset allocation? (hint: choose 2 correct answers)

• Well-balanced portfolio of different stock classifications

• Dividing among different asset categories based on risk

• Dividing among different asset categories based on time

• Chance your investment won't be worth as much in the future