Saving, Investing, and Building Wealth

What is an investment?

• Anything you acquire for future income or benefit

• A type of savings account

• A loan from a bank

• A type of insurance policy

What is compound interest?

• Interest that is charged for purchases on a credit card

• Interest that is paid on previously earned interest as well as the original deposit or investment

• Interest that is paid on a savings account

• Interest that is paid on a bond

What is the risk-return relationship?

• The higher the risk, the higher the expected return

• The higher the risk, the lower the expected return

• The lower the risk, the higher the expected return

• The lower the risk, the lower the expected return

What is the purpose of the investment pyramid?

• To balance savings and investments based on risk

• To maximize returns on investments

• To minimize taxes on investments

• To diversify investments across different asset classes

What is a bond?

• A type of stock

• A type of mutual fund

• A loan to a government or corporation

• A type of savings account

What are U.S. savings bonds?

• Bonds issued by the Federal Reserve Bank

• Bonds issued by the U.S. Treasury

• Bonds issued by state governments

• Bonds issued by foreign governments

What is a stock?

• A type of bond

• A type of mutual fund

• Ownership in a company

• A loan to a government or corporation

What are mutual funds?

• Investments in multiple stocks and bonds

• Investments in a single company

• Investments in real estate

• Investments in government securities

What is an individual retirement account (IRA)?

• A tax-deferred investment account for retirement savings

• A type of savings account for emergencies

• A loan from a bank for retirement expenses

• A type of insurance policy for retirement

What is a 401(k) plan?

• A retirement plan for self-employed individuals

• A tax-deferred investment account for college savings

• A retirement plan offered by employers

• A type of savings account for medical expenses