Personal Financial Literacy – Saving and Investing Test

Which of the following best describes the primary role of a financial institution?

• Printing money for the government

• Storing money without interest

• Facilitating saving, borrowing, and investing

• Providing free loans to the public

Which of the following is considered a financial market?

• Grocery store

• Stock exchange

• Post office

• DMV

How do financial institutions support individual saving and investing?

• By charging high fees for transactions

• By offering products like savings accounts, CDs, and investment accounts

• By preventing people from saving

• By only working with businesses

A key benefit of saving money in a bank savings account is:

• High risk and high return

• FDIC insurance and easy access to funds

• Unlimited investment growth

• No withdrawal limits or rules

Which of the following accounts usually offers the highest interest rate but requires locking in funds for a specific period?

• Checking account

• Savings account

• Certificate of deposit (CD)

• Credit card account

Which option below typically earns higher returns but involves more risk?

• Savings account

• Certificate of deposit

• Bonds

• Stocks

The main advantage of investing in a money market mutual fund is:

• High guaranteed returns

• Liquidity and relatively low risk

• FDIC insurance

• No management fees

Which statement about compound interest is correct?

• It only applies to checking accounts

• It grows on the original amount only

• It allows your savings to grow on both the principal and the interest earned

• It decreases over time

The longer your money is invested with compound interest:

• The less it will grow

• The more it will grow

• The interest rate will decrease

• Your principal will be reduced

Which of the following best describes “risk” in investing?

• Guaranteed returns

• Possibility of losing part or all of your investment

• Steady interest growth

• Government protection of all funds