Investing Quiz

What is investing?

• Saving money in a bank account

• Spending money on goods and services

• Growing your money over time by putting it to work in financial instruments

• Borrowing money to purchase a home

How does investing differ from saving?

• Investing is less risky than saving

• Investing cannot earn higher returns over the long term

• Investing involves taking on varying amounts of risk for the potential to earn higher returns over the long term

• Investing and saving are the same in terms of risk and potential returns

What kind of interest is calculated on the original amount of money plus the accumulated interest of previous periods?

• simple interest

• compound interest

• investment interest

What is the time horizon for short-term goals in saving?

• 1-5 years

• 5-10 years

• 10 years or more

What is the time horizon for mid-term goals in investing?

• Less than a year

• 1-5 years

• 5-10 years

• 10 years or more

What time horizon is associated with long-term goals in investing?

• Less than a year

• 1-5 years

• 5-10 years

• 10 years or more

What type of investment account allows you to take immediate tax deductions from your income and has you pay taxes later upon withdrawal?

• Brokerage Accounts

• Tax Deferred Accounts

• Tax Exempt Accounts

What type of investment account provides future tax benefits rather than tax breaks on contributions since withdrawals at retirement are not subject to taxes?

• Brokerage Accounts

• Tax Deferred Accounts

• Tax Exempt Accounts

What type of investment account has investments that are taxed at short or long term gains when they are sold?

• Brokerage Accounts

• Tax Deferred Accounts

• Tax Exempt Accounts

What is a type of employer-sponsored retirement plan where the employer may match a percentage of the employee's contribution?

• Savings Account

• 401(k)

• Certificate of Deposit

• Money Market Account