NEW
Font size
S
M
L
XL
WorksheetsInvestment Basics
Total questions: 12
Worksheet time: 7mins
Name
Class
Date
1.
Why is compound interest more advantageous than simple interest?
a)
It’s more difficult to calculate, so fewer people use compound interest, making more profits for those who do.
b)
Compound interest accumulates very rapidly, so you only have to save for 3 years or fewer to earn far more money.
c)
Compound interest is attached to the stocks with the highest risk, so you get the highest interest on them
d)
In compound interest, you earn interest on not only your principal, but also on the interest you’ve already made.
2.
Rule of 72: How many years to double my money if I get a 9% return on investment?
a)
8 years
b)
7.2 year
c)
7 years
d)
9 years
3.
When you buy a stock, you are buying a small piece of _______ in a company.
a)
debt
b)
ownership
c)
risk
4.
The Rule of 72 is used to find how long an it will take for
a)
investments to double
b)
debt to double
c)
interest to increase
5.
Why do companies issue stocks?
a)
To create and investment opportunity into other businesses.
b)
To increase employee cooperation
c)
To be traded individually
d)
To raise money for economic investment
6.
What is an IPO?
a)
Initial Polling Office
b)
Initial Public Offering
c)
International Public Office
d)
Increasing Public Opportunity
7.
The chance of loss.
a)
Stock
b)
Reward
c)
Risk
d)
Real Estate
8.
Justin wants to go to spend a month traveling Europe next summer but doesn’t have the money to do so. He’s thinking of investing the $700 he currently has saved in stock in his favorite restaurant in hopes of earning the money for the vacation. Why shouldn’t he do that?
a)
Investing in one company’s stock is quite risky.
b)
Investing your whole savings in the stock market is a bad financial move.
c)
One year probably isn’t enough time for one stock to turn $700 into a month’s vacation.
d)
All of the above
9.
Which of the following statements are true?
a)
Between cash, stocks, and bonds, bonds are typically considered the riskiest.
b)
Stocks are the riskiest investments out there.
c)
Putting money into a savings account with interest is the ideal way for a young adult to invest.
d)
Historically, stocks have had far greater annual returns than cash, government bonds, and savings
10.
Your risk tolerance for investing should be determined by these two factors:
a)
Your stocks and bonds
b)
Your time horizon and when you will need access to the money
c)
Your debits and credits
d)
Your education level and ethnicity
11.
Which of the statements below, regarding inflation, is accurate?
a)
You want the inflation rate to be higher than the interest you’re earning on your investments.
b)
We already know what the inflation rate will be in the year 2020, and we can use this information to make wise investments.
c)
Historically, US inflation has been roughly 3%
d)
If you invest your money, you don’t need to worry about inflation.
12.
You deposit $1,000 into a five year certificate of deposit (a type of savings account with a fixed rate of interest) earning 1% per year that compounds interest annually. After five years, the balance in your account will be…
a)
About $1000
b)
More than $1000 but less than $1010
c)
More than $1010 but less than $1030
d)
More than $1050
Reset
