Fin Lit Quiz 6

Which idiom expresses that you need to diversify your investments?

• Don't put all your eggs in one basket.

• Don't judge a book by its cover.

• Birds of a feather flock together.

In order to become part owner of a corporation, you should invest in ​ (a)   .

• stocks
• bonds
• dividends

An employer may choose to match money that employees invest in a ​ (a)   .

• 401(k) plan
• profit-sharing plan
• individual retirement account

Why do people purchase corporate bonds?

• repayment at maturity and a possible increase in value

• dividend income and repayment at maturity

When thinking about retirement, which of the following is correct?

• The earlier you start saving, the better.

• You can depend on Social Security and a company pension plan to pay all of your living expenses.

Jeff's annual contributions to his retirement are not tax-deductible, but his earnings accumulate tax-free. He is investing in a ​ (a)   .

• Roth IRA
• traditional IRA
• SEP plan

7. A(n) ​ (a)   is a financial contract that provides annual payments until a specified year or until one's death.

• annuity
• savings account
• trust

Which is BAD advice for planning and saving for retirement?

• Start early.

• Take advantage of employer plans.

• If you are eligible for Social Security, you will not need to worry about additional savings.

Which type of saving/investment product will likely yield the LOWEST return?

• savings account

• stocks

• certificate of deposit

Which type of saving/investment product will likely have the HIGHEST risk?

• savings account

• stocks

• certificate of deposit