Unit 2 Quiz Saving and Investing

Use the image and your knowledge to answer: Based on the graph, which of the following is the best investment strategy in order to save for retirement at 65?

• Invest in your 20s, stop investing after 10 years

• Invest in your 20s, continuously invest until retirement

• Invest in your 30s, continue to invest until retirement

• Invest in your 40s, stop investing after 10 years

A quick way to determine how long it will take your invested money to double is called

• Simple interest

• Compound interest

• Rule of 72

• Rule of 13

What interest rate would you need to have in order to double $2500 of invested money in 12 years?

• 5%

• 6%

• 12%

• 72%

What does a CD stand for when talking about savings and investments?

• Calculated dividend

• Central dollar

• Certificate of deposit

• Current deposit

A ____________ is a collection of various stocks, bonds, and other professional investments.

• Money Market Account

• Mutual Fund

• 529 Savings Account

• Retirement Fund

Investing in a global stock fund might be considered a good idea in order to

• Diversify into municipal and corporate bonds

• Focus all risk on the U.S. economy

• Keep your portfolio dependent primarily on the U.S. dollar

• Diversify holdings to spread risk outside of the U.S. economy

Which of the following statements about risk is true?

• Risk is about how uncertain your returns can be

• A risky asset is more likely to yield higher returns than a less risky asset

• Risk is about how much money you might potentially lose

• If an asset’s risk increases, its price will also increase

What does tax deferred mean?

• You pay taxes when you put money into a retirement account and when you withdraw from the same account

• You pay taxes initially on any money you put into a retirement account

• You pay taxes on money from a retirement account once you withdraw from the account

• You put off filing your taxes until after the April 15th tax date

The money you put into this type of account is pre-taxed

• Pension

• IRA

• Roth IRA

• 401K

What does it mean that money is LIQUID?

• It is invested in raw land

• It is invested in real estate

• It is invested in the stock market

• It is not invested and can be accessed quickly without loss of value