Unit Eight: Financial Planning Review

Of the many ways you can invest for your future, there is one that allows you to not only plan for a retirement savings, but also provide supplemental coverage to your insurance. Which of the following achieves this?

• Health Savings Accounts

• Roth IRA

• 401 (k)

• COBRA

Jack has purchased stocks in companies like Exxon, Tesla, General Electric, etc. When these companies make a profit and report their earnings, Jack and other investors will receive...

• Principal

• Dividends

• Extra Shares

• Nothing

Which best explains the difference between common stock and preferred stock?

• Common stocks can be traded only through discount brokerages while preferred stocks require a high end brokerage firm or financial advisor.

• Common stock refers to shares of a company that are easy to come by and preferred are very rare

• Common stocks are easily accessed through the NYSE and NASDAQ. Preferred can only be found on markets that are known to a few.

• Common stocks do not guarantee dividend payouts while preferred are guaranteed a percentage.

When these companies make a profit and report their earnings, Jack and other investors will receive...

• Principal

• Extra Shares

• Dividends

• Nothing

Of the retirement savings options below, which one will guarantee that you do not pay taxes on your money when you withdraw it at retirement?

• 401(k)

• Roth IRA

• Traditional IRA

• Defined Benefits Plan

Which best explains the relationship between risk and reward in regards to investments and investment strategies?

• The lower the risk of the investment the higher the reward.

• 
  There is no known relationship between risk and reward.

• The lower the risk of the investment the lower the reward.

• 
  The higher the risk of the investment the lower the reward.

Based on the information provided, which statement about Kevin's account is true?

• Kevin has established a savings account that only pays interest upon withdrawal.

• 
  Kevin has opened a savings account that pays interest quarterly.

• Kevin has established a savings account with simple interest.

• Kevin has established a savings account with compounding interest.

If you were looking to invest your money into a single investment type that would offer, potentially the greatest return, regardless of the risk involved which would be your best choice.

• Savings Accounts

• Bonds

• Stocks

• Money Market Acount

How does investing in the stock market differ from putting money in a savings account at a bank?

• Investing is always a less risky option than saving

• Investing allows you to accumulate wealth for retirement while saving is best for short-term purchases or emergencies

• 
  Investing is best for short-term situations like emergency funds; saving is best for the long-term

• Investing typically earns between 1-2% while saving generally earns between 5-7%

Why is compound interest more advantageous than simple interest?

• Compound interest allows you to earn interest on the amount you have saved, and on the interest you've already earned

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

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

• Compound interest has lower fees than simple interest