New PFLE unit 2 Flash card review

Imagine you're a financial wizard like Priya or Daniel! The magical mantra "pay yourself first" in personal finance means:

• Prioritizing personal expenses over bill payments

• Setting aside savings before spending on other expenses

• Paying off all debts before saving any money

• Investing in high-risk stocks for quick returns

Imagine you're in a classroom with Mia, Abigail, and James discussing investments. Which of the statements below BEST describes the relationship between risk and return when considering an investment?

• a. Investors expect to earn a lower return when they invest in a high risk asset.

• b. Investors expect to earn a higher return when they invest in a low risk asset.

• c. Investors expect to earn a higher return when they invest in a high risk asset.

What is the primary purpose of an emergency fund?

• To invest in high-risk stocks

• To cover unexpected expenses

• To pay off long-term debt

• To purchase luxury items

Which typically has fixed interest payments?

• Stocks

• Bonds

• Mutual funds

• Real estate

Imagine you're on a thrilling adventure with Arjun and Charlotte, exploring the world of investments! Why is it crucial to understand your risk tolerance before diving into this financial journey?

• It helps you decide if you want to participate in your employer’s match program for your 401(k)

• It is recommended that people with a low risk tolerance should NOT invest at all.

• If you have a high risk tolerance, you may be eligible for lower fees since you won’t care if your portfolio drastically loses value.

• You should tailor your investment portfolio so that it assumes an amount of risk you are comfortable with.

Imagine you're on a quest to become a savings wizard! Which of the following strategies would Isla, Daniel, and Henry use to master the art of personal saving?

• Wait until the end of the month and save whatever is left in your checking account.

• Save a certain percentage of each paycheck and deposit it directly into a savings account.

• Cover all of your wants and needs and save whatever is left over.

• Take out a payday loan so you can save before you receive your paycheck.

What is a benefit of a bank account?

• High returns

• Ownership in companies

• FDIC insurance

• Voting rights in corporations

A money market account is a.

• An investment in foreign currencies

• A high-risk investment option

• A type of checking account with no restrictions

• A savings account with check-writing privileges and higher interest rates

Why is diversification a recommended investment strategy?

• Investing in a diversified portfolio guarantees that you won’t lose money with your investments.

• If you tell your fund manager to use diversification, they’ll charge you lower fees.

• Diversifying your portfolio helps reduce risk.

• If you diversify your portfolio, you will definitely earn a high return.

Arjun and Sophia are discussing the stock market. Can you help them figure out what the term "bull market" refers to?

• A market in decline.

• A market showing sustained increase in stock prices.

• A market dominated by bearish investors.

• A market where stocks are traded for animals.