Unit 3 Review

Why is compound interest more beneficial than simple interest?

• Fees for compound interest are greater than simple interest

• Your money grows faster when it is compounded

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

• Compound interest is morally right

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Which would be considered the highest risk investment type?

• Stocks

• Bonds

• Mutual Fund

• Money Market Account

The relationship between risk and return can be stated as

• Higher risk indicates lower return

• Lower risk indicates higher return

• Higher risk indicates higher return

• No relationship exists between risk and return

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

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

• Capital gains

• Dividends

• Interest

• Holding the stock atleast 3 years

If interest rates rise, what will typically happen to bond prices?

• Rise

• Fall

• Stay the same

The face value of a bond is called

• Principal

• Par Value

• Maturity Date

• Coupon

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

• 3%

• 7%

• 10%

• 30%

_______ is about setting yourself up for long-term financial success. It’s the process of putting money to work over a long period, such as 10-60 years, by buying and holding assets that will grow from compound interest.

State the three reasons to invest.