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WorksheetsFinance Unit Assessment 1
Total questions: 63
Worksheet time: 35mins
Which definition best describes a barter system?
An exchange of goods for money
An exchange of money for goods
A form of trading goods for goods
A form of trading pigs for cows
Why was the barter system used?
Because there was no format of standardized money
Because they hated the form of money that was used
Because it was convenient
Because people could trade between countries
Why did governments stop using the barter system?
Because they thought trading goods was dumb
Because they wanted to have money that was easy to carry
Because they wanted to put their faces on money
Because they needed a standard form of money
A definition of Opportunity Cost is...
When you buy both the things you want
When you give something up for something that you need/want more
When you go to dunkin instead of starbucks
When you make a budget and stick to it
An example of opportunity cost is...
When you have two options and you choose the one you do not want
When you buy all your friends food because they have no money
When you buy fries from Chick-fil-a and nuggets from Wawa
When you go to Dunkin instead of Starbucks because Dunkin is cheaper and you are trying to saving money
What are values?
When you learn a lesson between right and wrong
Basic understanding of how another person feels
Basic beliefs that help us decide what is important to us
When you make a financial plan between your wants and needs
What does SMART goal stand for?
Specific Measurable Attainable Realistic Timely
Specific Measurable Attainable Responsible Timely
Smart Money Allowance Realistic Timely
Secure Money Actionable Responsible Timely
What was the first country to introduce paper money?
The US
China
Greece
England
Why are there so many details on Federal Reserve notes (US money)?
Because they wanted it to look pretty
To make it different from other money
Because it is cheaper that way
To reduce the number of forgeries
What is culture?
the values of a nation/civilization
the core beliefs of one person
the wants and needs of a community
the name of a country
Needs are...
Things you want to have in order to survive
Things you have to have in order to thrive
Things you have to have to survive
Things you want to have in order to thrive
Anything that is purchased with the hope that it will generate income or be more valuable at a future date.
investment
loan
income
expense
Money borrowed from a bank.
dept
loan
budget
expense
The fee for borrowing and using someone else's money.
expense
interest
interest rate
income
Payment received for goods or services, including employment.
interest
dept
credit
income
The percentage at which interest is charged or paid.
interest
interest rate
budget
cost benefit analysis
Money owed, usually as a result of borrowing.
debt
expense
income
interest
wants=survival
wants=other things
The barter system is still in use in some areas today.
True
False
How does investing in the stock market differ from putting money in a savings account at a bank?
Investing is always a less risky option than saving.
Investing is best for short-term situations like emergency funds; saving is best for the long-term
Investing allows you to accumulate wealth for retirement while saving is best for short-term purchases or emergencies
Which of the following statements is TRUE about compound interest?
Compound interest means you have a fund manager who is compounding your returns without charging a fee.
Compound interest allows you to earn interest not only on the amount you have saved, but also on the interest you've already earned.
Compound interest always impacts how much you will be charged in fees.
You purchased 10 shares of stock in Amazon for $50.00 per share. Three months later you decide to sell all 10 shares for $75 per share. What was your profit or loss on the sale?
Loss of $250.00
Profit of $250.00
Profit of $750.00
Loss of $750.00
Which of the statements below BEST describes the relationship between risk and return when considering an investment?
Investors expect to earn a higher return when they invest in a high risk asset
Investors expect to earn a lower return when they invest in a high risk asset
Investors expect to earn zero return when investing in a low risk asset
Why should you diversify your investments?
Investing in a diversified portfolio guarantees that you won’t lose money with your investments
Diversifying your portfolio helps reduce risk
If you diversify your portfolio, you will definitely earn a high return
How is a bond different from stock?
A bond is a loan you give to a organization, while stock is partial ownership in a company.
Bonds are best for earning high returns while stocks are best for providing a stable source of income
Bonds are typically riskier than stocks.
How can someone make money from investing in a stock?
They receive dividends or sell the stock at a higher price than what they paid for it.
They sell the stock for the same price they bought it for.
The stock loses value but the overall market experiences a positive return
Why are Index Funds such a popular investing option?
They are actively managed by a fund manager.
They provide a low cost, diversified investment option that closely matches the return of a given index like the S&P 500.
They are a mix of 2 to 4 stocks to help you keep diversified.
What kinds of behaviors can PREVENT people from making smart investing decisions?
Staying calm when the market is experiencing a downturn
Buying stocks when prices are low and selling them when they’re high
Exiting the market because that’s what everyone else is doing
Investing in a diversified portfolio instead of trying to beat the market
Which of the following accurately describes a difference between an individual bond compared to a bond fund?
A bond pays you dividends while a bond fund pays you regular interest
A bond guarantees you a higher rate of return than a bond fund
A bond is issued by a company while bond funds only invest in government bonds
A bond is considered to be a less diversified investment than a bond fund
You bought 10 shares of stock in Streaming Video Co for $45 per share. Two months later you sold the 10 shares of stock for $80 per share. What was your profit or loss on Streaming Video Co stock? (Assume that Streaming Video Co didn't pay a dividend and that you didn't incur any trading fees during that period.)
Loss of $800
Profit of $350
Loss of $450
Profit of $800
How is a bond different from a stock?
A bond is a loan you give to an organization while a stock is partial ownership in a company
Bonds are typically riskier than stocks but have the potential to earn higher returns
Bonds are usually issued by smaller startup companies while stocks are issued by well established organizations
Bonds are best for earning high returns while stocks are best for providing a stable source of income
Why is it important for you to understand your risk tolerance before you start investing?
It helps you decide if you want to participate in your employer’s match program for your 401(k)
It’s recommended that people with a low risk tolerance shouldn’t invest at all
If you have a high risk tolerance, you may be eligible for lower fees since you won’t care if your portfolio drastically loses value
You should tailor your investment portfolio so that it assumes an amount of risk you are comfortable with
Nancy is new to investing and is eager to get started. All of the following are things she should do EXCEPT...
Invest in a low cost index fund
Estimate how much she will need for retirement to determine how much she needs to invest each month
Pick individual stocks to see if she can beat the market
Invest in a diversified portfolio
How is a bond different from a stock?
Bonds are usually issued by smaller startup companies while stocks are issued by well established organizations
A bond is a loan you give to an organization while a stock is partial ownership in a company
Bonds are typically riskier than stocks but have the potential to earn higher returns
Bonds are best for earning high returns while stocks are best for providing a stable source of income
Why is it important for you to understand your risk tolerance before you start investing?
You should tailor your investment portfolio so that it assumes an amount of risk you are comfortable with
It helps you decide if you want to participate in your employer’s match program for your 401(k)
If you have a high risk tolerance, you may be eligible for lower fees since you won’t care if your portfolio drastically loses value
It’s recommended that people with a low risk tolerance shouldn’t invest at all
Over time, the stock market has…
Gone through severe ups and downs with an overall decrease in value
Had slight ups and downs but stayed about the same in value
Rarely experienced changes and has maintained the exact same value
Experienced highs and lows but increased in overall value
How does investing in the stock market differ from putting money in a savings account at a bank?
Investing is best for short-term situations like emergency funds; saving is best for the long-term
Investing is always a less risky option than saving
Investing allows you to accumulate wealth for retirement while saving is best for short-term purchases or emergencies
Investing typically earns between 1-2% while saving generally earns between 5-7%
What kinds of behaviors can PREVENT people from making smart investing decisions?
Buying stocks when prices are low and selling them when they’re high
Staying calm when the market is experiencing a downturn
Exiting the market because that’s what everyone else is doing
Investing in a diversified portfolio instead of trying to beat the market
Why is this likely a bad investment strategy to invest all your money in individual stocks?
Purchasing individual stocks has a high amount of risk and little diversification.
You will need a large amount of money to invest in individual stocks.
You will need to open multiple brokerage accounts for each stock you purchases.
Purchasing individual stocks has a very low amount of risk and a low return.
What type of market is described by a receding economy and a decline in the stock market?
Bear Market
Pig Market
Sheep Market
Bull Market
New investors should do all of the following things EXCEPT...
Estimate how much you will need for retirement to determine how much you need to invest each month
Invest in a diversified portfolio
Invest in a low cost index fund
Pick individual stocks to see if she you beat the market
During a BULL market…
The unemployment rate in the country increases
More investors are buying stocks, which causes stock values to increase
Investors are pessimistic about how the stock market will perform
The economy is not doing as well
What are the advantages of investing in a mutual fund, rather than an individual stock?
A mutual fund has a target date to be sold, so you can pay less attention to changes in the market
A mutual fund always pays out higher dividends than an individual stock
A mutual fund is actively managed, resulting in lower overall fees
A mutual fund is diversified, so your investment is lower risk
Which of the following statements is TRUE about compound interest?
Compound interest means you have a fund manager who is compounding your returns without charging a fee
Compound interest is difficult to calculate, so those who use it earn higher profits for their efforts
Compound interest allows you to earn interest not only on the amount you have saved, but also on the interest you've already earned
Compound interest directly impacts how much you will be charged in fees
How can someone make money from investing in a stock?
They receive dividends or they sell the stock at a higher price than what they bought it for
They sell the stock for a lower price than what they bought it for
The stock loses value but the overall market experiences a positive return
They sell the stock for the same price they bought it for
What is one way you can earn money by investing in bonds?
Through dividends.
By purchasing a diversified bond type.
Through interest collected on your original investment.
By selling your shares in the bond.
Why is it challenging to match your investing decisions with how the stock market is performing?
It is hard to predict trends, and trends can only be identified once they’ve already happened
You have to invest large amounts of money to have your decisions match the performance of the stock market
The stock market is typically in a BEAR market for a specific period of time
The stock market is typically in a BULL market for a specific period of time
A 401(k) plan is a...
bank account specifically for entrepreneurs
special type of business plan
benefit that helps workers invest for retirement
benefit for workers making $401,000 or less
What is a key difference between saving and investing?
Saving earns compound interest while investing earns simple interest
Saving guarantees you the money you put away while investing has no guarantees.
Saving is for long-term goals; investing is for short-term goals
Saving earns a much higher rate of return than investing your money
Which of the following statements BEST describes the stock market?
Businesses listing their entire company for sale
Investors buying stock in hopes of being hired by companies
People making donations to companies that need funding
Businesses selling partial ownership of their companies to raise capital
Why is this likely a bad investment strategy to invest all your money in individual stocks?
Purchasing individual stocks has a high amount of risk and little diversification.
You will need a large amount of money to invest in individual stocks.
You will need to open multiple brokerage accounts for each stock you purchases.
Purchasing individual stocks has a very low amount of risk and a low return.
If major US companies' shares fall significantly, how would it impact s&p500?
s&p500 will also fall
s&p500 will go up slightly
s&p500 will skyrocket
it does not impact s&p500 because it is a different index
When you own part of a company, this means you own ________ of that company.
dividend
asset
stock
bankrupt
The New York Stock Exchange is (select all the correct answers)
an exchange with a real physical location
the market of choice for the largest companies in America
the oldest exchange in the world
an over-the-counter market
True or false: a company's value = its stock price
true
false
