FSV VOCAB 08: Investing Intro

What is a 401(k) or 403(b) in terms of financial planning?

• A retirement savings plan with tax advantages

• A type of credit card

• A government-funded pension

• A personal savings account

Which of the following best defines an 'Asset'?

• A resource with economic value and an expectation of future benefit

• A legal liability or obligation that is expected to be settled

• A financial document or contract

• A type of expense incurred by businesses

What is a 'Bond' in investment terms?

• An investment vehicle representing a loan made by an investor to a borrower

• A type of stock share where the owner gets a loan.

• A mutual fund made up of government agencies.

• A certificate of deposit

What is the primary purpose of 'Capital' in business?

• To cover operational costs such as electricity.

• The amount returned to a company's owners.

• To expand the business.

• To pay taxes

What characterizes 'Debt'?

• A financial obligation to repay borrowed money

• The amount of money returned to a company's owners.

• An asset or item acquired with the goal of increasing in value.

• A method of taxation

What does 'Equity' represent in a company?

• The amount of money returned to a company's owners if all assets were sold and debt paid back.

• The total debts of a company that must be paid back plus interest.

• The yearly revenue of a company which determines profit.

• The number of employees in a company

What is the goal of acquiring an 'Investment'?

• To generate income or increase value

• To gain financial security

• To save for retirement

• All of the above

The Rule of 72 is used to determine _____.

• the age a person is eligible for retirement

• how long it takes for money to double at a given interest rate

• the amount of money that should be put aside for emergencies

• a person's federal income tax rate

What does it mean to buy a share of stock in a company?

• Lending money to the company.

• Owning a portion of the company.

• Owning the company's products.

• Borrowing money from the company.

How is a bond different from a stock?

• A bond is a loan you give to an organization while a stock is partial ownership in a company

• Bonds are typically riskier than stocks but have the potential to earn higher returns

• Bonds are usually issued by smaller startup companies while stocks are issued by well established organizations

• Bonds are best for earning high returns while stocks are best for providing a stable source of income