Financial Algebra Final Q1 Unit 3

Which of the following is a key difference between a 401K and an IRA?

• 401K contributions are made with after-tax dollars, while IRA contributions are made with pre-tax dollars.

• 401K plans are typically offered by employers, while IRAs are individual accounts.

• 401K plans have no contribution limits, while IRAs do.

• IRAs are only available to self-employed individuals.

Using the Rule of 72, approximately how many years will it take for an investment to double if it earns an annual interest rate of 6%?

• 6 years

• 8 years

• 12 years

• 18 years

Tags

CCSS.HSF.LE.A.4

If you invest 500 and it grows to 750 in 5 years, what is the return on investment (ROI)?

• 25%

• 50%

• 75%

• 100%

Which of the following is an example of a fixed-income investment?

• Stocks

• Bonds

• Real estate

• Mutual funds

Which type of investment typically offers the highest potential return but also the highest risk?

• Savings accounts

• Bonds

• Stocks

• Certificates of deposit (CDs)

What is the main advantage of compounding interest continuously?

• It results in the lowest possible interest accumulation.

• It allows for interest to be calculated only once a year.

• It maximizes the amount of interest earned over time.

• It simplifies the calculation process.

If you invest $1000 at an interest rate of 8% compounded continuously- how much will be in the account at the end of 5 years?

Which of the following is a tax advantage of a traditional IRA?

• Contributions are tax-deductible.

• Withdrawals are tax-free.

• There are no required minimum distributions.

• Contributions can be made at any age.

If an investment has an annual return of 9%, how many years will it take to double according to the Rule of 72?

• 6 years

• 8 years

• 9 years

• 12 years

Tags

CCSS.HSF.LE.A.4