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WorksheetsUnit 6 Investing Review
Total questions: 21
Worksheet time: 11mins
To put out money in order to gain profit
Investing
Rate of Return
Brokerage Account
Stocks
Where you can buy, sell, and trade stocks
Stock Market
IPO
Index Fund
Inflation
The profit of an investment
Rate of Return
Diversification
Compound Interest
IRA
A general increase in prices and fall in the purchasing value of money
Inflation
Bonds
Custodial Account
Simple Interest
All of the shares into which ownership of the company is divided
Stocks
Rate of Return
Broker
Investing
A financial strategy where you invest in different companies instead of fixating on one to reduce risk
Diversification
Compound Interest
Custodial Account
IRA
The first sale of stock issued by a company to the public
IPO-Initial Public Offering
IRA-Individual Retirement Account
Stock
Inflation
A savings account with big tax breaks, an ideal way to sock away cash for your retirement
IRA-Individual Retirement Account
Brokerage Account
Simple Interest
Index Fund
The amount of money you earn on your savings account balance
Simple Interest
Bonds
Stocks
Inflation
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 earns a much higher rate of return than investing your money
Saving is for long-term goals; investing is for short-term goals
Select the best definition of compound interest.
Compound interest is earning interest on the original amount you deposited.
Compound interest is earning interest on the original amount you deposited plus any interest earned.
Compound interest is the amount of interest you are charged on your bank account each month.
Compound interest is earning a fixed dollar amount on your bank account each month.
What type of market is described by a receding economy and a decline in the stock market?
Bear Market
Bull Market
Pig Market
Sheep Market
Duncan plans to invest all of his money in individual stocks. Why is this likely a bad investment strategy?
He will need a large amount of money to invest in individual stocks.
Purchasing individual stocks has a very low amount of risk and a low return.
He will need to open multiple brokerage accounts for each stock he purchases.
Purchasing individual stocks has a high amount of risk and little diversification.
Bonds have a _________ to moderate amount of risk and are ___________ risky than stocks.
low, less
high, more
high, less
low, more
One should save instead of invest for which type of goal?
Short Term
Long Term
Never
All Goals
Dahlia is 24 years old. She makes $85,000 per year, has a fully funded Emergency Fund, and extra income each month. What should be her investor risk level?
Conservative
Moderate
Agressive
Average
Which of the following is a characteristic of an index fund?
High fees
Insured
Diversified
Professionally managed
Earning ______ on the original amount you deposited plus any interest earned is called Compound Interest.
Interest
Inflation
IRA
Bonds
Mariam is young, willing to take a moderate amount of risk, but most importantly, wants an investment that is low-cost and diversified. Which is the best investment type for Mariam?
A bond
An individual stock
A savings account
An index fund
Which statement best describes how diversification impacts risk when you are investing?
Diversification means spreading your money across multiple investments, which decreases risk.
Diversification means putting all of your money into one investment, which decreases risk.
Diversification means spreading your money across multiple investments, which increases risk.
Diversification means putting all of your money into one investment, which increases risk.
Why is it important for you to understand YOUR risk tolerance before you start investing?
it is recommended that people with a low risk tolerance shouldn't invest at all.
If you have a high risk tolerance, you will likely pay less in investment fees.
You should create an investment portfolio that includes an amount of risk you are comfortable with.
You must be willing to take a high amount of risk to begin investing.
