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WorksheetsPF Unit 5
Total questions: 20
Worksheet time: 10mins
Name
Class
Date
1.
Which statement best describes liquidity?
a)
How quickly and easily an asset can be turned into cash
b)
The amount of savings available
c)
How much a person owns once all debts have been paid
d)
The amount of money needed to pay for wants and needs
2.
When taking advantage of the time value of money, which would result in the largest return?
a)
Invest a large amount and then make no additional investments
b)
Invest as long as possible at the highest interest rate
c)
Invest a small amount for a short time at the highest interest rate
d)
Invest at a high interest rate since interest is the only factor affecting return
3.
Compound interest is best defined as:
a)
Interest earned on the principal investment
b)
Any form of interest earned from saving or investing
c)
Earning interest on interest
d)
The effect interest has on total return
4.
When you are saving toward a specific goal, giving up snack food to achieve the goal is the:
a)
Opportunity Cost
b)
Interest
c)
Specific part of SMART goal
d)
Trade-off
5.
Which statement best reflects the philosophy of "Pay Yourself First"?
a)
Save whatever money is left after paying all bills
b)
Pay all fixed expenses before paying flexible expenses
c)
Save before using any money for spending
d)
Spend money on entertainment before paying any other expenses
6.
In relation to all other savings tools, how liquid is a savings account?
a)
More liquid than cash
b)
Less liquid than mutual funds
c)
More liquid than a CD
d)
More liquid than a checking account
7.
Which savings tool is very liquid and easily accessible?
a)
CD
b)
Checking Account
c)
Money Market Account
d)
Any of the above
8.
Regarding a Money Market Account, which of these answers explains a tiered interest rate?
a)
The higher the account balance, the higher the interest rate
b)
Amount earned depends on the # of accounts you have
c)
It is something illegal
d)
The rate of interest earned increases over time
9.
Which of the following is a feature of a Certificate of Deposit (CD)?
a)
Funds are held for a certain length of time
b)
Funds have tiered interest rates
c)
Funds in CD's are very liquid
d)
Funds can be accessed by a check or debit card
10.
Which of the following is a feature of a money market account?
a)
No minimum balance
b)
Unlimited transactions every month
c)
Tiered interest rates
d)
Funds must remain on account for a specific period of time
11.
Which statement best describes inflation?
a)
The rise in the general level of prices
b)
The uncertainty about the return on an investment
c)
The number of times something happens to money
d)
The projected value of an investment
12.
The most common relationship between risk and return in investing can be stated as:
a)
Higher risk indicates lower return
b)
Higher risk indicates higher return
c)
Lower risk indicates higher return
d)
No relationship exists
13.
A diversified portfolio is desirable because it:
a)
Increases the risk/return ratio
b)
Limits investors choices to only one or two investments
c)
Indicates an investor is a good predictor of the return
d)
Decreases risk by investing in a variety of investment tools
14.
Which of the following is not true regarding investing in stocks.
a)
A stockholder owns a part of a company
b)
Stockholders may pay different prices for the same stock
c)
May or may not receive a dividend
d)
A stockholder will always receive a profit
15.
Who would you contact to purchase a stock?
a)
A brokerage firm
b)
NYSE
c)
Real Estate Agent
d)
Complete the transaction on your own
16.
Which statement is true about Mutual Funds?
a)
Speculative Investments
b)
Diversified Investments
c)
Form of Real Estate Investment
d)
Superior to purchasing a single stock
17.
A bond is:
a)
Type of debt a company issues to investors for a specific period of time
b)
A share of ownership in a company
c)
Only offered by banks
d)
Has potential for significant fluctuations
18.
Which of the following type of investment is structured to have tax benefits?
a)
Tax Rated Bonds
b)
Speculative Investments
c)
Index Funds
d)
Tax-advantages Investments
19.
It is best to have the rate of return ___________ than the rate of inflation.
a)
Lower, in order to minimize taxes
b)
Lower, in order to minimize risk
c)
Higher, to maintain purchasing power
d)
Higher, to minimize risk
20.
Which of the following is true regarding paying taxes on investments?
a)
Since investments are unearned income, taxes don't have to be paid
b)
Taxes are often owed on profits from investments
c)
Taxes only have to be paid on employer sponsored plans
d)
Taxes are always paid when buying or selling an investment
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