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WorksheetsACEE-#2 Personal Finance Prep (Stocks/Bonds/Loans/The Fed)
Total questions: 53
Worksheet time: 40mins
What is a stock?
A loan an investor makes to a company or government that pays interest over time.
A share of ownership in a company
A collection of investments sold as a package.
An option to purchase something in the future at todays price.
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
This is where your orders to buy or sell stock are sent and carried out
Stock Exchange
Brokerage Firm
Stock Meeting Place
Money Exchange
All of the following are ways to earn money as a stockholder EXCEPT:
getting dividends
selling the stock at a higher value
stock splits
selling the stock at a lower value
Spreading your investments around to inrease financial security
Risk assessment
Diversification
Stocks, bonds & cash
Liquidity trap
Professionally managed, diversified investment that pools resources of many investors
Treasury bonds
Stock index
Mutual fund
Saving account
If you bought a stock at $20 a share and now it's worth $40 a share how much do you make per share if you sell all your stock now?
$10
$40
$20
-$20
A key difference between saving and investing is
Saving is for everyone, investing is for the wealthy
Your money is insured when investing, it is not in savings
Investing has a guaranteed return, savings does not
Saving is for emergencies & goals, investing is for long-term wealth
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
Andy earned $300 on a $1000 investment. What is his current ROI (return on investment)?
2%
3%
30%
70%
A diversified portfolio is desirable because
It limits investment choice
It's a good predictor on rate of return
It increases risk and return
It decreases risk
Why is it important to start investing as soon as possible?
You take less risk when you are young, so money will be safe
You have more time for your money to compound
Investing is an easy way to make quick money
Fees on investments are cheaper when you are younger
True or False: Investing in a diversified portfolio of stocks guarantees you will not lose money.
True
False
Which of the following correctly orders the investments from LOWER risk to HIGHER risk?
Treasury bond − Stock − Diversified mutual fund
Stock − Treasury bond − Diversified mutual fund
Treasury bond − Diversified mutual fund – Stock
Diversified mutual fund − Treasury bond − Stock
Which type of investment is the least risky?
stock
bond
mutual fund
savings account
Bing Liu, an investor could not attend the last shareholders meeting and thus he granted the authority to vote on his behalf to the managers of the firm. Which one of the following terms is used to describe the method by which Bing Lius's shares were voted?
a. Straight
b. Cumulative
c. Proxy
When a company earns a profit, sometimes those profits are distributed to the company’s shareholders. This means those shareholders are paid a _________________.
dividend
asset
stock
bankrupt
Stocks issued by large respected companies.
Growth Stocks
Income Stocks
Blue Chip Stocks
Cyclical Stocks
Stocks valued around $1-$10.
Defensive Stocks
Large Cap Stocks
Small Cap Stocks
Penny Stocks
When you purchase a municipal bond, you are:
buying a portion of a municipality
diversifying your portfolio
investing in an index fund
loaning money to a municipality
A bond issued by a corporation is called a ________ .
corporate bond
market share
stock option
share of stock
The rate of interest on a bond is called the ________ .
bond rate
coupon rate
discount rate
interest rate
These bonds are considered the safest from default and are very popular with investors.
Treasury bond
Income bond
secured bond
mortgage bond
What are payday loans
A loan you repay on your payday.
Short term unsecured loan with very high interest rates.
Short term secured loan with very high interest rates.
Short term loan with low interest rates.
The formula for working out simple interest is I = Prt. P is the Principal - what is this?
The head of the college
A set of values
The amount of money borrowed or saved
The interest rate per year
The Federal Reserve...
Regulates the amount of money.
Supervises Banks.
Provides Financial Services.
All of the above.
Michael has been invited by a friend to go fishing on Friday. His parents are going to a concert. Michael chooses to go fishing with his friend. What is his opportunity cost?
fishing with a friend
going to a concert
Mortgages with shorter terms have higher monthly payments. Why would anyone want a short-term mortgages?
You pay less in principal in total
You pay less interest in total
You pay less in property taxes in total
You pay less in insurance and processing fees
Which of the following will a bank consider in its decision to approve you for a mortgage?
Your ethnic background
Your religion
Your salary
Your hobbies
If you have a mortgage with a 20-year terms, how many payments will you probably have to make?
20
200
240
360
What can you infer from the fact that banks require a down payment on a mortgage?
They want to increase the amount of money they loan
They want to make sure the borrower will not walk away from the loan
They want to increase they amount of interest on the loan
They want to get their hands on as much cash as possible
