saving and investing

What is a bond?

• A. A legal agreement to perform a service for a specified amount of money.

• B. An IOU issued by a company, municipality, or the federal government in exchange for a loan from an investor that will be repaid with a set rate of return.

• C. A fee received for providing financial advice.

• D. A commitment to set aside a portion of one's earnings for retirement.

What does a financial institution do?

• A. Issues government bonds exclusively.

• B. Provides money-related services.

• C. Offers free financial education to the public.

• D. Prints and distributes currency.

What is interest?

• A. The principal amount of a loan.

• B. A fee paid for the use of money.

• C. The total amount of money saved over a year.

• D. A tax on financial transactions.

What does it mean to invest?

• A. To save money in a checking account.

• B. To purchase items for personal use.

• C. To commit money to gain a profit or earn interest.

• D. To lend money to friends and family.

What does "pay yourself first" mean?

• A. To spend money on personal luxuries before paying bills.

• B. To lend money to oneself.

• C. To automatically save a specified amount from a paycheck for future use.

• D. To prioritize paying off personal debts before other expenses.

What is a MUTUAL FUND?

• A government-issued savings plan.

• A collection of stocks or bonds of various corporations.

• A private investment club.

• A type of insurance policy.

What does OPPORTUNITY COST mean?

• The cost of starting a new business.

• The interest rate on a loan.

• The next best alternative given up when making a financial choice.

• The expenses incurred while investing.

What does PRINCIPAL refer to in a financial context?

• The head of a financial institution.

• The profit made from an investment.

• The amount of money originally invested.

• The interest rate on a savings account.

What is RISK in terms of finance?

• The guaranteed return on an investment.

• The possibility of financial loss or physical harm.

• The act of saving money in a bank.

• The legal responsibility of a company.

What is STOCK?

• A bond issued by a corporation.

• A certificate of deposit at a bank.

• A share of a corporation sold to the public.

• A type of currency.