Investments

When the stock market has been rising and investors are confident, expecting stock prices to continue rising, it is described as a

• Bear Market

• Bull Market

• Stagnant Market

• Volatile Market

Why will a person investing 3% of a $31,000 salary each year in a 401(k) starting at age 25 have much more money at age 70 than someone who waited until age 50 to invest 3% each year of a $55,000 salary?

• The invested money has had a longer period of time to benefit from compounding and investment gains.

• The higher salary of $55,000 leads to more total investment over time.

• The person starting at age 50 has access to better investment options.

• The 401(k) contributions are tax-free, making them more beneficial.

Of these investments, the one with the most risk is:

• Bond fund

• Savings bond

• Corporate stock

• Corporate bond

Erika and Mark received an inheritance of $100,000. They plan to invest their inheritance money to buy a house in six years. Which of the following carries the greatest risk?

• Common stocks

• Bonds

• Checking account

• Savings account

Mutual funds are:

• An investment that holds a wide range of different investment instruments, providing diversification

• A type of savings account with a fixed interest rate

• A government bond that guarantees returns

• A stock that represents ownership in a company

A factor that is likely to affect the market price of a stock is:

• Corporate profits

• Wages

• Age of the company

• The number of corporate employees

A bank Certificate of Deposit is a:

• Savings instrument that requires a deposit for a period of time during which there is a penalty for withdrawals

• Type of checking account with no minimum balance requirement

• Loan product that allows borrowing against future income

• Investment vehicle that offers stocks and bonds in a single fund

A public corporation announced today that it lost a major lawsuit. As a result, it is most likely that the

• Price of their stock will decrease

• Price of their stock will increase

• Price of their stock will remain the same

• Price of their stock will become volatile

When purchasing stock, a person should be aware that:

• There is a guarantee that the price of the stock will go up

• The price of the stock may go down as well as up

• The stock will always provide dividends

• The stock price is fixed and will not change

It is usually a good idea to borrow for

• Something that decreases in value over time

• Something that increases in value over time

• A temporary expense

• An unnecessary luxury