Saving and Investing Test Review

Appreciation refers to the increase in the value of an investment.

• True

• False

Investment risk is the possibility that an investment will fail to pay the expected return, or fail to pay a return at all.

• True

• False

Philip is young and has always been a risk taker. A rich uncle has left him some money with the requirement that he invest it. If Philip's investment strategy is similar to his personality, he would be most likely to put the money in a certificate of deposit.

• True

• False

Unearned income includes any income from dividends received from stocks.

• Yes

• No

When buying stocks, one must always use a full service brokerage firm.

• True

• False

If a stock is sold for a price lower than what was paid, the stockholder will lose money.

• True

• False

A mutual fund has less risk than a bond.

• True

• False

An index is a group of similar stocks and bonds.

• True

• False

The goal of diversifying a portfoliois to increase your exposure to risk.

• True

• False

Investments are usually more liquid than savings.

• True

• False