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WorksheetsTEST Saving to Invest, Investing to Retire
Total questions: 37
Worksheet time: 59mins
(a) Earnings on a traditional (regular) IRA are tax-exempt.
(a) Never borrow money to invest.
(a) A single stock is the best place to keep your emergency fund.
(a) Individuals with an aggressive investment philosophy are not willing to take on risk for the potential of higher returns.
(a) Stocks are considered a riskier investment than bonds.
A (a) is a high risk investment that is banking on someone dying in a certain amount of time
Based upon risk factors, reorder the following investments from HIGH to LOW risk.
Collectibles
Stocks
Mutual Funds
Bonds
The dollar amount that the bondholder will get at the bond’s maturity date called (a) .
As an investor (according to our pyramid), with higher risk comes the potential to (a) .
What is a stock broker?
Nick is an investor who is worried about how inflation might affect his portfolio. Which statement best describes inflation?
The rise in the overall price level of goods and services
The uncertainty about the return on an investment
The frequency of financial transactions
The projected value of an investment at the end of a specified time frame
(a) based on the number of credits you receive and you should NOT count on it as a sole retirement fund.
Ron has invested some money in a savings account. Using the Rule of 72, what interest rate would double his money in 36 years?
2%
3%
4%
5%
What is a mutual fund?
A loan an investor makes to a company or government that pays interest over time.
A share of ownership in a local government.
A group of investments sold as a package.
A group of saving and checking accounts
What is the Dow Jones Industrial Index?
A statistic that compiles the average industrial output of all North American and European countries.
A stock market index based on 1000 of the largest companies in the world.
A stock market index based on 30 of the largest companies in the United States.
The stock market is located in New York City.
What is a bond?
A loan an investor makes to a corporation or government that pays interest over time.
A share of ownership in a local government.
A collection of investments sold as a package.
Diversification is important in investing because…
It ensures that you only make low-risk investments.
It helps you to balance your risk across different types of investments.
It increases your overall risk, which could make you more money.
Which statement is true about liquidity?
The less liquid the investment, the less return.
The more liquid an investment, the more return.
The more liquid an investment, the less return.
Both a and b.
Miriah's College and Career class has been discussing the importance of understanding liquidity. She is trying to explain the term to another student. Which statement is the most correct description of liquidity?
How quickly and easily an asset can be converted into cash
The amount of savings available
A measurement of how much a person or household owns once all debts have been paid
The amount of money needed to pay for the necessities and comforts currently enjoyed
Which of the following is incorrect about stock market investment?
Investors can buy and sell stocks in the stock market.
The price of a stock is determined by supply and demand in the market.
Investing in stocks can lead to financial loss.
Investing in stocks guarantees a fixed return.
Kate, a federal government worker, is wondering who public pension plans are for. Are they for:
People like her, federal government workers?
Her friend, a railroad employee?
Her uncle, who works at the Veterans Administration?
All of these people?
John is planning for his retirement and is considering purchasing a contract from an insurance company. This contract guarantees a future fixed or variable payment to John for a certain number of years or for life. What is this type of contract called?
Roth IRA
401 (k)
Annuity
403 (b)
Russell Wilson contributes $3,000 to his 401(k) retirement plan and his employer offers a 5% match. How much total money would be in Russell's account if he hasn't exceeded the 5% match limit?
$3,000
$6,000
$150
$3,150
After you've decided to leave your job at Google after working there 5 years, the most advisable action to take regarding your retirement plan is to ------------------------------ into an Individual Retirement Account (IRA)
Transfer the funds from your retirement
Rollover your retirement account
Maintain your retirement account in a 401(k)
Convert your retirement account
When your company does not match your contributions to your 401(k), you should maximize your retirement contributions in a (a)
Which of the following is not a retirement plan?
Roth IRA
401(k)
403(b)
529
Sheldon works at Quest, a company that offers 401(k) plans as a benefit to employees. What should Sheldon do?
Sheldon should take advantage of the 401(k) plan offered by his company.
Sheldon should save for his children’s college first, then start saving for retirement once they have graduated college.
Sheldon should contribute 1% of his annual income to the 401(k), regardless of how much the employer is willing to match.
Sheldon should start an IRA first, then work towards a 401(k) once he has a nest egg.
Which of the following is NOT a benefit of investing in mutual funds?
They offer diversification and thus reduce risk
They have professional management
They are not strictly regulated and do not require full disclosure.
Provides an investor with limited resources and an entire portfolio of diverse securities
What is the primary reason to issue stock?
To 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 investor awareness of the company
Sara is an investor and she is considering four different portfolios. Which of these portfolios would be considered the highest risk for Sara?
A portfolio made up of 20% savings accounts, 50% mutual funds, and 30% bonds.
A portfolio made up of 40% mutual funds, 40% government bonds, and 10% stocks.
A portfolio made up of 60% stocks, 30% mutual funds, and 10% government bonds.
A portfolio made up of 70% mutual funds, 10% stocks, and 20% government bonds.
Which of the following is generally true about 401(k) and 403(b) retirement plans?
They are plans offered through employers
They offer some tax benefits
They restrict when you can withdraw your money
All of these.
(a) has the highest level of investment risk.
Ruth is 16 and has earned some extra money at her summer job working at Big Play. She decides to invest it and let it grow until retirement. She has 49 years until retirement at age 65.
Which of the following investment philosophies would best fit Ruth at this time?
Conservative
Moderate
Aggressive
Match the following term with the correct statement.
Market condition that occurs when investors are doubtful about the economy and sell stocks
Bear market
Market condition that occurs when investors are hopeful about the economy and buy stocks
Bull market
Type of stock that could pay variable dividends and gives owners (stockholders) voting rights
Common stock
Type of stock that guarantees a fixed dividend but does not provide voting rights
Preferred stock
A group of letters standing for a particular stock, mutual fund, or other security
Stock symbol
Match the following terms with the correct statement below.
Type of bond issued by states, counties, cities, and towns
Municipal bond
Used to judge the risk of buying a bond
Bond ratings
Bonds that have high ratings and are considered fairly low-risk
Investment-grade bonds
Type of investment that includes rare coins, works of art, antiques, stamps, and other items that appeal to collectors and investors
Collectibles
The buying and selling of securities on the same day, often online, on the basis of small, short-term price fluctuations
Day trading
Match the following terms with the correct statement.
The typical retirement plan found in most corporations.
401(k)
The typical retirement plan found in most non profits.
403(b)
Annual contributions are not tax-deductible, but the earnings are tax-free
Roth IRA
An individual’s general approach to investment risk
Investment philosophy
Invests in securities to match a market index with the goal of having returns similar to those of that index
Index funds
Label the diagram according to the investment risks and categories.
Higher Risk/High Return
Futures, Commodities
Day Trading, Collectibles
Bonds, Stocks, ETFs, Real Estate, etc
Savings Tools
Investment Tools
Speculative Investments
Checking, Savings, MMA, CD
