FP I Unit 2 Test Review

Investors take a risk for the potential of receiving a:

• A bonus.

• B. prize.

• C. promotion.

• D. return.

Ownership investments are ideal for investors who are:

• A risk-averse.

• B. risk-tolerant.

• C. close to retirement.

• D. just beginning to invest.

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

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

• B. Money market accounts provide corporate ownership rights.

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

• D. Money market accounts are insured by the FDIC.

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

• one stock to another.

• one investment to another.

• C. stocks to stock mutual funds.

• D. corporate bonds to municipal bonds.

One of the biggest risks to a real estate investment is:

• A depreciation.

• B. a low rate of return.

• C. lacking FDIC insurance.

• D. the inability to write checks.

Which statement is true about certificates of deposit?

• A They may depreciate in value.

• B. The riskiest investment is a certificate of deposit.

• c. One must pay a penalty for withdrawing money early.

• D. Certificates of deposit are issued by corporations or governments.

A disadvantage of owning stocks is the:

• A high degree of risk.

• B. low potential for return.

• C. penalty for early withdrawal.

• D. potential for loss of time and effort.

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

• A bonds.

• B. guarantees.

• C. securities.

• D. treaties.

Which is an example of a lending investment?

• A bonds

• B. stocks

• C. antiques

• D. real estate

With a lending investment, investors:

• A avoid taking any risk.

• B. hire a financial advisor.

• C. allow borrowers to use their money for a price.

• D. maintain a minimum amount of money in the investment.