Unit 1 Investing Review

What does TVM stand for in investing?

• Time Value of Money
• Total Value of Markets
• Trade Value of Money
• Timing Variables in Money
• Text for option 5 (optional)

Why does money today have more value than money in the future?

• It can earn interest
• Inflation reduces buying power
• Markets always rise
• Taxes increase over time

Which formula is used for simple interest?

• P × R × T
• P × (1 + R)^T
• (Principal ÷ Time) × Rate
• EPS ÷ Shares

Compound interest is often called…

• Interest on interest
• Simple growth over time
• Annualized return
• Flat interest on deposits

If you invest $1,000 at 10% simple interest for 3 years, your total is…

• $1,300
• $1,331
• $1,200
• $1,100

If you invest $1,000 at 5% compound interest for 2 years, total is…

• $1,102.50
• $1,100
• $1,050
• $1,200

Which grows faster over time?

• Compound interest
• Simple interest
• Flat interest
• Opportunity cost

An investor who ignores compound interest risks…

• Missing potential growth
• Avoiding taxes
• Having no risk
• Gaining higher liquidity

Which risk cannot be reduced through diversification?

• Market risk
• Company-specific risk
• Liquidity risk
• Opportunity cost

If a company’s CEO resigns and stock drops, this is…

• Company risk
• Market-wide risk
• Liquidity risk
• Political risk