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WorksheetsUnit 3- Investing & Wealth Management
Total questions: 85
Worksheet time: 1hrs 15mins
Return refers to the money you can earn from an investment.
True
False
An example of a blue-chip stock is Best Buy.
True
False
Real estate and collecting items such as coins and stamps are also examples of investing.
True
False
In a bear market, investment prices rise, so it is important to buy as soon as possible.
True
False
Investing is usually done to meet long-term goals and earns a significant amount of interest.
True
False
Is the money in a Roth IRA taxed when it is withdrawn?
True
False
Selling your stock when it reaches a certain price is known as a limit order.
True
False
Mutual funds are a great option for people who need diversification and don't know much about investing.
True
False
To calculate the rate of return, divide your share of the profit by the amount you invested.
True
False
The main difference between a traditional IRA and a Roth IRA is when the money is taxed.
True
False
Diversifying increases the overall risk of loss.
True
False
The more money you invest, the higher the interest rate you earn, and the sooner you invest, the more money you will earn.
True
False
It is best to start investing as soon as possible.
True
False
Dividends are earned when you sell your stock for more than what you paid for it.
True
False
It is possible to lose all of your invested money.
True
False
403(b) plans are offered to public employees and are tax-deferred.
True
False
Risk refers to the chance that an investment will decrease in value.
True
False
As a stockholder, you own a part of a company.
True
False
Diversifying your investments means varying your investments with different levels of risk.
True
False
Dow Jones and S&P 500 are examples of stock indexes.
True
False
The two American stock exchanges are the NYSE and NASDAQ.
True
False
If you invest $20,000 in a friend's company and after one year you receive $250 as your share of the profit,
what is your ROR?
0.0125%
80%
8%
1.25%
You invest $675 in a computer repair company. At the end of the year, you receive $300 as your share of the profit. What is your Rate of Return (ROR)?
44%
2.25%
0.44%
22.5%
____________ refers to the potential of not earning or even losing money.
Return
Security
Risk
Diversification
____________ refers to an intangible investment.
Return
Security
Risk
Diversification
Selling your stock for more than you paid for it is known as _______________.
stock
dividends
return
capital gains
Earnings of a company shared with its stockholders are known as _______________.
Capital gains
Dividends
Stock
Return
Stocks in a corporation that are expected to experience rapid growth are known as _____________
Blue chip stocks
Preferred stock
Growth stock
Common stock
A non-voting share that pays a fixed dividend is a _____________
growth
blue chip stock
preferred stock
common stock
This type of retirement account is only offered to public employees.
Traditional IRA
Roth IRA
403(b)
None of the above
This type of retirement account is not tax-deferred.
403(b)
Roth IRA
Traditional IRA
None of the above
____________ refers to the strategy of investing in a variety of businesses with different levels of risk.
diversification
security
risk
return
Stocks in a large, well-established business, like Microsoft, are known as _____________.
common stock
preferred stock
growth stock
blue chip stock
This is a professionally managed, diverse portfolio of investments.
Roth IRA
Bond
Traditional IRA
Mutual fund
What is the primary reason for a company to issue stock?
The stocks help investors earn a higher rate of return
To raise money to grow the company
To distribute the risk of bankruptcy across more investors
To increase greater awareness of the company
Spreading your investments around to increase financial security
Risk assessment
Diversification
Stocks, bonds & cash
Liquidity trap
Ownership in a publicly traded corporation is represented by?
CD - Certificate of Deposit
Money Market
Treasury Bill
Stock
Which would be considered the highest risk investment type?
Stock
Mutual Fund
Bond
Money Market Account
The relationship between risk and return can be stated as:
Higher risk indicates higher return.
Higher risk indicates lower return.
Lower risk indicates higher return.
No relationship exists between risk and return.
How can you earn money from stocks? (Hint: Choose 2 correct answers)
Capital gain
Interest
Dividends
Holding the stock for at least 3 years
Andy earned $300 on a $1000 investment. What is his current ROI (Return on Investment)?
2%
3%
30%
70%
Some examples of _____ are coins, stamps, and jewelry.
Collectibles
Returns
Bonds
Limit orders
What is the term for the profit made from selling an investment for more than its purchase price?
Dividend
Capital gain
Interest
Return on Investment
Which type of investment typically carries the highest risk?
Bonds
Real Estate
Stocks
Savings Account
What is the term for the spread of investments to reduce risk?
Allocation
Diversification
Segmentation
Integration
What is the main advantage of diversification in an investment portfolio?
It eliminates taxes
It reduces overall risk
It guarantees higher returns
It increases liquidity
Which account allows you to invest pre-tax dollars for retirement and pay taxes upon withdrawal?
Money Market Account
Traditional IRA
401(k)
Roth IRA
What does it mean when a company goes public?
It starts selling products to the public
It issues shares on a stock exchange
It increases its employee count
It merges with another company
Which financial instrument represents ownership in a corporation?
Mutual Fund
Stock
Bond
Savings Account
Which investment type allows you to buy and sell shares throughout the trading day at market prices?
Certificate of Deposit
Mutual fund
Exchange-Traded Fund (ETF)
401(k) plan
A collection of stocks and/or bonds combined into one fund which will be traded as a unit, typically chosen and actively managed by an "expert" in exchange for a fee from each investor
stock
bond
CD
mutual fund
Capital Gains
Profit from the sale of an asset, such as a stock or a bond, calculated by subtracting the price you initially paid from the price you then sold it for
Money from the profits of a company that is paid out to its shareholders, typically on a quarterly basis
The ratio of money gained or lost on an investment relative to the amount of money invested; also known as return on investment (ROI)
A share of the value of a company, which can be bought, sold, or traded as an investment and which gives the investor small partial ownership of the company
Dividend
Profit from the sale of an asset, such as a stock or a bond, calculated by subtracting the price you initially paid from the price you then sold it for
Money from the profits of a company that is paid out to its shareholders, typically on a quarterly basis
The ratio of money gained or lost on an investment relative to the amount of money invested; also known as return on investment (ROI)
A share of the value of a company, which can be bought, sold, or traded as an investment and which gives the investor small partial ownership of the company
Stock
Profit from the sale of an asset, such as a stock or a bond, calculated by subtracting the price you initially paid from the price you then sold it for
Money from the profits of a company that is paid out to its shareholders, typically on a quarterly basis
The ratio of money gained or lost on an investment relative to the amount of money invested; also known as return on investment (ROI)
A share of the value of a company, which can be bought, sold, or traded as an investment and which gives the investor small partial ownership of the company
The practice of investing in a large variety of stocks, bonds, and/or funds as a way to as a way to reduce your overall risk
Diversification
Investing
Dividend
Risk
The process of setting money aside to increase wealth over time for long-term financial goals such as retirement
Diversification
Investing
Dividend
Risk
Degree of uncertainty on how likely the investor is to make money on an investment
Risk
Return
Stock
Dividend
An individual retirement account that allows a person to set aside pre-tax income up to a specified amount each year
Traditional IRA
Roth IRA
NASDAQ
401(k)
The second largest stock exchange in the world behind the NYSE
Traditional IRA
Roth IRA
NASDAQ
S&P 500
The world's largest stock exchange, physically located in New York City
NYSE
Nasdaq
S&P 500
Index Fund
An index of 500 large cap companies chosen based on their size, industry, and other factors, used to represent the entire market
NYSE
Nasdaq
S&P 500
Index Fund
Roth IRA
An individual retirement account that allows a person to set aside after-tax income up to a specified amount each year
An individual retirement account that allows a person to set aside pre-tax income up to a specified amount each year
A federal program that provides monthly benefits to millions of Americans, including retirees, military families, surviving families of deceased workers, and disabled individuals
A bond, generally considered to be a risk-free investment, issued by the U.S. Treasury with a maturity of more than 10 years
A retirement savings plan, sponsored through your employer who will often match your contributions, that allows an individual to save for retirement and have the savings grow while deferring taxes until funds are withdrawn
Traditional 401(k)
Traditional IRA
Index Fund
Mutual Fund
Rate of Return
A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including mutual funds and ETFs
The ratio of money gained or lost on an investment relative to the amount of money invested; also known as return on investment (ROI)
A collection of stocks and/or bonds combined into one fund which will be traded as a unit, typically chosen and actively managed by an "expert" in exchange for a fee from each investor
A market where shares in corporations are bought and sold through an organized system
Stock Exchange
A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including mutual funds and ETFs
The ratio of money gained or lost on an investment relative to the amount of money invested; also known as return on investment (ROI)
A collection of stocks and/or bonds combined into one fund which will be traded as a unit, typically chosen and actively managed by an "expert" in exchange for a fee from each investor
A market where shares in corporations are bought and sold through an organized system
