Final Review: Investing

1. Building Wealth is the process of

• Saving money in the bank and not spending it

• Collecting material possessions which maintain value, such as gold jewelry, diamonds, paintings etc

• Not spending

• Combining budgeting, saving and investing to increase net worth

A security that represents part ownership of a company is called a(n) _____________.

• 1. Stock

• 1. Bond

• 1. Certificate of Deposit

• 1. Annuity

When you invest in a mutual fund, you are contributing to a pool of money that will be . . .

• 1. Given to hundreds of local charities in your area

• 1. Invested in a mix of stocks, bonds and money market accounts

• 1. Taxed based on each individual investor's annual salary

• 1. Put into a separate savings account for your children to inherit someday

Diversification reduces your __________ by using a mix of investment types in your portfolio.

• 1. Mutual funds

• 1. Risk

• 1. Retirement Funds

• 1. Income

Roth IRA, 401(k), 403(b), 457, and Simplified Employee Pension are all examples of  

• 1. Tax forms

• 1. Mutual funds

• 1. Retirement plans

• 1. Investment bankers

 Mutual funds are less risky and can outperform the stock market because . . . 

• 1. They're not diversified.

• 1. They guarantee a high rate of return.

• 1. They're fully liquid.

• 1. They invest in several companies at once.

Earning interest on interest is called?

• 1. Compound interest

• 1. Investing

• 1. Earned interest

• 1. bonding

Based on the Rule of 72, money earning 8 percent would take about _____ years to double.

• 6

• 9

• 8

• 12

Which of the following statements about mutual funds is true?

• 1. Mutual funds are only invested in stocks.

• 1. Mutual funds are not regulated by any financial authorities.

• 1. Mutual funds pool money from multiple investors to invest in a diversified portfolio of securities.

• 1. Mutual funds guarantee a fixed rate of return to investors.

What sets index funds apart from other mutual funds?

• 1. Index funds have higher fees compared to actively managed mutual funds.

• 1. Index funds aim to match the performance of a specific market index rather than actively selecting investments.

• 1. Index funds are exclusively focused on investing in individual stocks of tech companies.

• 1. Index funds are known for their ability to provide guaranteed returns regardless of market fluctuations.