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WorksheetsSaving & Investing Test Review
Total questions: 51
Worksheet time: 18mins
You are opening a savings account that earns compound interest. Which compounding frequency will earn you the MOST money?
Compounding 1 time a year
Compounding 4 times a year
Compounding monthly
Compounding daily
Which of the following correctly orders the investments from LOWEST risk to HIGHEST risk?
Certificate of Deposit– Real Estate– Mutual Fund
Real Estate – Certificate of Deposit – Mutual Fund
Certificate of Deposit – Mutual Fund – Real Estate
Mutual Fund – Certificate of Deposit- Real Estate
What is the purpose of a company issuing stock?
To grow equity interests that encourage diversification
To raise money that can be used to growth the company
To increase the influence of the current owners of the company
To exempt the company from paying taxes
The measure of how long it takes your investment to double.
Compound Interest
Rule of 72
Simple Interest
Interest Rate
When taking advantage of the time value of money, which of the following is most likely to result in the largest return?
Invest one large principal amount of money for a short period of time, and then make no additional investments.
Invest as long as possible and at the highest interest rate possible.
Invest a small amount of money for a short period of time at the highest interest rate possible.
Invest at a high interest rate because interest is the only factor that affects return.
Compound interest is best defined as:
Interest earned on the principal investment.
Any form of interest earned from saving or investing.
Earning interest on interest.
The effect interest has on the total return on investment.
Which of the following is true in regards to investing in stock?
A stockholder owns a part of a company.
A stockholder is able to make important decisions about the direction of the company.
A stockholder will always receive a dividend.
A stockholder will always receive a profit when the stock is sold.
Saving money because of a concern for losing ones’ job is an example of saving for:
a goal
a particular purchase
retirement
an emergency
If you’re interested in having your money invested in many different companies, you should buy a share in:
a bond
real estate
a large company
mutual funds
When talking about diversifying your investments, you are referring to
putting all your money in the lowest risk investment possible.
purchasing speculative investments.
loaning your money to the government.
investing in multiple different investments.
Compared to a stock, a bond provides
a greater chance of higher returns.
smaller dividends.
greater liquidity.
a lower level of risk.
What is one characteristic of a Certificate of Deposit (CD)?
Funds deposited in a CD are held for a certain length of time.
Funds deposited in a CD have lower Interest than a Savings Account.
Funds deposited in a CD are very liquid.
Funds deposited in a CD can be accessed via check/ATM.
Which one is NOT an example of a long term investment option?
stock
bond
real estate
checking account
Interest earned on a Traditional IRA is
tax deferred
tax free
taxable upon reaching the age of 45
taxable up to $2,000 a year
What do IRA’s, Roth IRAs, 401ks and 403b all have in common?
All are combination codes on bank vaults
All are long-term savings plan for retirement
All are checking accounts that you sign up for at local bank
All are short-term savings plans
Timothy has invested $1,600 for college. What interest rate must Timothy earn for his investment to double in 8 years?
.05%
9%
22%
300%
If you divide the interest rate paid into 72, the result tells you how many years it will take for the amount initially saved to double if you receive compound interest. At a compound interest rate of 12 percent, how many years will it take to double your money?
7.2 years
6.0 years
7.0 years
10.0 years
Which of the following is an example of investing?
Putting money into a piggy bank at home.
Saving spare change and using it to buy snacks.
Buying a U.S. savings bond.
Buying groceries for the family.
If you have $75 in a savings account for one year at an interest rate of 5 percent, how much interest will you earn at the end of the year?
$3.25
$4.75
$3.75
$4.25
One way people can earn money from stocks is by
buying stock from an investment banker.
selling the stock for the same price as the price they paid for the stock.
selling the stock for a lower price than the price they paid for the stock.
selling the stock for a higher price than the price they paid for the stock.
Which type of account is typically the MOST liquid?
Checking Account
Savings Account
Certificate of Deposit
Exchanged Traded Fund
When it comes to saving money, what is a good rule of thumb?
Keep most of your savings in your checking account.
Put aside money for savings each month.
Choose the savings account with the lowest interest rate.
Putting anything you can’t afford on your credit card.
When you buy a _________ , you are loaning money to an organization.
stock
bond
mutual fund
index fund
Which of the following would be considered the highest risk portfolio?
A portfolio made up of 20% savings accounts, 50% mutual funds, and 30% bonds.
A portfolio made up of 40% mutual funds, 40% bonds, and 10% stocks.
A portfolio made up of 60% stocks, 30% mutual funds, and 10% bonds.
A portfolio made up of 70% mutual funds, 10% stocks, and 20% bonds.
Which of the following accounts will give you the LEAST access to your money?
Simple savings account
Certificate of Deposit (CD)
Checking Account
Money Market
Diversification is important in investing because . . .
It helps you to balance your risk across different types of investments.
It increases your overall risk, which guarantees that you will make more money.
It ensures that you only make low-risk investments.
It helps you gain the highest rate of return despite any risks.
When should a person start saving?
age 18
age 24
age 30
as soon as possible
When saving, an example of an emergency that one would save for would be:
retirement
college
health problems
new car
Which of the following savings or investing tools would go with “Capital Growth”?
stocks
real estate
insurance
certificate of deposit
Which of the following savings or investing tools would go with “Financial Growth”?
stocks
real estate
insurance
certificate of deposit
Which of the following savings or investing tools would go with “Income”?
stocks
real estate
insurance
certificate of deposit
Which of the following savings or investing tools would go with “Protection”?
stocks
real estate
insurance
certificate of deposit
An account to hold money not spent on current monthly expenses.
Investment
Savings Account
Checking Account
Stock
The purchase of an asset with the goal of increasing your wealth or increasing future income.
Investing
Savings
Checking
Interest
Company profits distributed to stockholders.
Capital
Interest
Dividends
Rent
The percentage rate paid on money invested or saved.
Rate of Return
Trade-Off
Capital Gains
Risk
Insured account offered at banks, usually requiring a higher deposit.
Money Market
Certificate of Deposit
Savings Account
Stock Market
The term used to describe how quickly an asset can be turned into cash.
Accessibility
Solidity
Liquidity
Trade-Off
One who owns stock.
Teller
Dividend
Owner
Shareholder
The profit from selling stock at a higher price than one paid for it.
Trade-Off
Dividend
Interest Rate
Capital Gains
Withdrawal from an occupation, investing money during active working life for financial support
IRA
Risk
retirement
Stock market
A trading market where stock is bought and sold.
stock market
farmer's market
sales market
investment market
The possible loss you face if your investment fails.
Rate of return
risk
capital gains
trade off
Total return on investment expressed as a percentage of the amount of money saved/invested
Interest rate
trade off
risk
dividend
A tax deferred retirement savings plan offered to employees by their employer.
401 K
Dividend
Savings Account
IRA
A retirement savings plan with special tax benefits, but it is NOT employer sponsored.
401 K
Dividend
Savings Account
IRA
Portion of income not spent on current expenses
Maturity Date
Capital Gains
Savings
Certificate of Deposit
The higher the risk, the higher the potential for greater return (vise versa)
Maturity Date
Shareholder
Liquidity
Trade off
Account that pays higher interest on a lump sum of money for longer periods of time
Certificate of Deposit
Money Market
Savings Account
Checking Account
Specified time in the future when the principal amount of a bond is repaid to the bondholder
Due Date
Maturity Date
Deadline
Issue Date
What dollar amount of government sponsored insurance by the FDIC is provided to bank customers?
$10,000
$150,000
$250,000
$350,000
