HONORS Fall 2023 Banking & Investing TEST

A mutual fund is 

• An investment in a diversified group of stocks
• The money left over when reinvested into the company
• An account that guarantees a fixed rate of return
• Exclusively for retirement accounts

Don't put all your eggs in one basket best refers to which of the following pieces of advice

• Diversify your stock portfolio in order to reduce risk
• Invest in a single stock for the largest gain
• Take out as many loans as you can
• Don't hesitate when buying stocks

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

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 of the following is NOT one of the rules for building wealth?

• Save and invest early and often.

• Invest for the short haul.

• Don't leave money on the table.

• Diversify your investments.

What is a good strategy to help you save?

• 1st, spend money on all expenses; put the rest into saving
• Tap into your savings on a regular basis to purchase small items, like snacks
• Pay yourself first - set aside money for savings each month
• Keep your spending and saving money together in 1 account

Diversification is important in investing because…

• It helps you to balance your risk across different types of investments.

• It increases your overall risk, which guarantees that you will make more money.

• It ensures that you only make low-risk investments.

• It helps you gain the highest rate of return despite any risks.

Why is investment diversification important?

• you will be guaranteed to make the most money

• if one corporation does poorly, others may succeed and your investment could grow

• the more corporations you invest in, the lower interest rate on your returns

• it allows for one corporation to make substantially more money than its competitor

Checking accounts are only offered by banks, not credit unions.

• TRUE

• FALSE