Investment Vocab Quiz

Which of the following statements is TRUE about compound interest?

• Compound interest is difficult to calculate, so those who use it earn higher profits for their efforts

• Compound interest means you have a fund manager who is compounding your returns without charging a fee

• Compound interest earns you more interest than simple interest

• Compound interest directly impacts how much you will be charged in fees

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Daniel is going to put $2,000 in a savings account that earns 0.5% interest annually for 3 years. How much more money would he have had if he invested in a high interest savings account at 8% interest compounded monthly for the same 3 years?

• He would make less money

• He would make more money

• The ending balance would be the same

• Not enough information

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CCSS.RI.9-10.4

CCSS.RI.9-10.4

CCSS.RI.8.4

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You bought 10 shares of stock in StreamingVideoCo for $45 per share. Two months later you sold the 10 shares of stock for $80 per share. What was the result?

• Made money

• Lost money

• Broke even

• Not enough information

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CCSS.RI.9-10.4

CCSS.RI.9-10.4

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CCSS.RI.6.4

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

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How can someone make money from investing in a stock?

• Always sell the stock for a lower price than what they bought it for

• Always sell the stock for more money than you bought it for

• The stock will always lose value; so do not ever invest in stocks

• Always sell the stock for the same price they bought it for

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CCSS.RI.9-10.4

CCSS.RI.9-10.4

CCSS.RI.8.4

CCSS.RI.11-12.4

CCSS.RI.7.4

You are a public-school teacher, and you invest in a tax-deferred account offered by your employer. Which investment is this?

• 401k

• 403b

• Roth IRA

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CCSS.RI.9-10.4

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CCSS.RI.7.4

CCSS.RI.11-12.4

Your friend Jai is an engineer who set up a retirement account with automatic income investment and company match. What is this account?

• Roth IRA

• 401k

• Stocks

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CCSS.RI.9-10.4

CCSS.RI.9-10.4

CCSS.RI.8.4

CCSS.RI.7.4

CCSS.RI.11-12.4

Your roommate is a government website designer who will receive payments after retirement. What is this type of investment?

• Mutual Fund

• Stocks

• Pension

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CCSS.RI.9-10.4

CCSS.RI.9-10.4

CCSS.RI.8.4

CCSS.RI.11-12.4

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Your other roommate is a barista who invests 10% of his salary in company stock. What is this investment?

• Mutual Fund

• Stocks

• Pension

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CCSS.RI.9-10.4

CCSS.RI.9-10.4

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You believe you will make more money in retirement than now, so you invest in a post-tax account. What is this account?

• 401k

• 403b

• Roth IRA

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CCSS.RI.9-10.4

CCSS.RI.9-10.4

CCSS.RI.8.4

CCSS.RI.7.4

CCSS.RI.11-12.4