2nd Semester PF Test Chapter 3

Compound Interest is......

• interest paid on interest previously earned
• the persistent rise in the cost of goods and services over time
• concept that an amount of money is worth more today than in the future due to earning potential

Principal is.....

• interest paid on interest previously earned
• the initial amount of money invested or borrowed
• the persistent rise in the cost of goods and services over time
• People in a school office

Rate of Return is....

• the initial amount of money invested or borrowed​​​​​​​
• interest paid on interest previously earned
• the measure of an investment’s profit or loss, usually expressed as a percentage of the initial investment
• the persistent rise in the cost of goods and services over time

Inflation is....

• How much air you put in your tire
• The persistent rise in the cost of goods and services over time
• interest paid on interest previously earned

Compound Growth is...

• the average rate of growth for an investment over time; often expressed as an annual figure
• the amount of interest charged on a debt but not yet collected; interest accumulates from the date a loan is issued
• the percentage of principal charged by the lender for the use of its money

45% of Americans have less than $1,000 saved for a(n)

• A. Emergency
• B. Car
• C. Retirement fund
• D. New smartphone

You'll have less freedom with your money if you . . .

• A. Invest in the stock market
• B. Are paying for things in your past
• C. Put money in a bank account
• D. Make less than $35,000

Once you have a $500 emergency fund, you should . . .

• A. Start putting it toward debt
• B. Invest it in the stock market to grow your money
• C. Save it until you have an emergency
• D. Use the money to pay for health insurance

The first step you should take when you want to make a large purchase is . . .

• A. Ask your parents to loan you the money with low interest
• B. Get a new credit card
• C. Decide how much you'll need to save and the time frame you want to save it in
• D. Sell something and use the proceeds

The best way to build wealth is to start investing early. You should start investing money . . .

• A. Once you have a fully funded emergency fund
• B. Once you're out of college, living debt-free, and have 3–6 months of living expenses saved
• C. When the stock market is performing really well
• D.As soon as you have extra cash