2.04 FP1

Ownership investments are ideal for investors who are:

• risk-averse.

• risk-tolerant.

• close to retirement.

• just beginning to invest.

Which is a disadvantage of investing in a savings account?

• The account's potential for loss is high.

• The rate of return fails to keep up with inflation.

• One must pay a penalty for withdrawing money early.

• A minimum balance is required to keep the account active.

Which is a factor that determines how much investment risk a person can handle?

• goals

• income

• social status

• banking institution

Which is an advantage of investing in bonds?

• They are very low risk.

• They are insured by the FDIC.

• They offer extremely high rates of return.

• They permit people to access their money at any time.

Which is an example of a lending investment?

• bonds

• stocks

• antiques

• real estate

Which is an advantage of a money market account over a savings account?

• The rate of return on a money market account is significantly better.

• Money market accounts provide corporate ownership rights.

• One can often write checks from a money market account.

• Money market accounts are insured by the FDIC.

In investing, legal lending or owning agreements between individuals, businesses, or governments are known as:

• bonds.

• guarantees.

• securities.

• treaties.

Which statement is true about certificates of deposit?

• They may depreciate in value.

• The riskiest investment is a certificate of deposit.

• One must pay a penalty for withdrawing money early.

• Certificates of deposit are issued by corporations or governments.

Investors take a risk for the potential of receiving a:

• bonus.

• prize.

• promotion.

• return.

The purpose of the risk pyramid is to show a comparison of:

• one stock to another.

• one investment to another.

• stocks to stock mutual funds.

• corporate bonds to municipal bonds.