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WorksheetsUnit 1: Saving vs Investing Content (and some math) Practice Qs
Total questions: 23
Worksheet time: 21mins
What is the primary purpose of an emergency fund?
Funding a vacation
Buying stocks
Covering unexpected expenses
Saving for a car
Which term means treating savings as a non-negotiable "expense"?
Compounding
Liquidation
Diversification
"Pay Yourself First" (PYF)
Which of the following savings vehicles is primarily for day-to-day transactions?
Money Market Account
Certificate of Deposit
Checking Account
Mutual Fund
The principal in most savings vehicles is __________.
At high risk
Not exposed to external / market fluctuations
Always increasing
Dependent on stock performance
What is a major concern with the returns from most savings vehicles in relation to inflation?
Returns always outpace inflation
Returns are always equal to inflation
Returns may not always outpace inflation
Returns are not affected by inflation
Which investment is a debt security where you essentially loan money to the issuer?
Stocks
Real Estate
Commodities
Bonds
What is the primary purpose of diversification in an investment portfolio?
Increase returns
Reduce risk
Ensure liquidity
Focus on one sector
In the Relative Risk Pyramid, where would you place savings accounts?
Base (lowest risk)
Middle (moderate risk)
Top (highest risk)
Outside the pyramid
Which investment vehicle issues dividends?
Real Estate
Derivatives
Stocks
Commodities
What do ETFs and mutual funds have in common?
Both are debt securities
Both represent a basket of securities
Both have very high management fees
Both involve savings vehicles
Which Excel function would you use to figure out the value of an investment, years into the future, given a specific rate of return?
=PV
=FV
=PMT
If you invest $1,000 at an annual interest rate of 5%, compounded annually, how much interest would you earn in the first year?
$10
$25
$50
$100
If you use $1000 of your own money to make a $250 profit, what is your ROI?
30%
.25%
20%
25%
If you invest $1,000 at an annual interest rate of 5%, compounded annually, how much interest would you earn in the second year?
$50.00
$52.50
$55.00
$100
Which of these is the most liquid?
Your shares of Nvidia stock
Your house.
A checking account with Chase Bank
A certificate of deposit with Bank of America
What is NOT a purpose of using saving vehicles?
Building wealth for retirement
Short-term goals
Emergency fund
Stability
Which of the following is NOT a characteristic of investing?
Long-Term
Risk
Highly liquid
Not Liquid
Which of the following is a contract that derives its value from an underlying asset and is often used for strategic hedging?
Stock
Real Estate
Derivative
Mutual Fund
In finance, which term describes the phenomenon where earnings generate their own earnings?
Diversification
Liquidity
Compounding
Hedging
We're projected to make an ROI of 40% over a 10 year period with the proposed investment.
If we use the inflation rate to discount the ending value of our investment back to present day terms what will happen to our ROI?
It will decrease.
It will increase.
Which savings vehicle typically offers a higher interest rate than standard savings accounts but may come with higher minimum balance requirements? It's a hybrid between a checking and savings account.
Checking Account
Certificate of Deposit (CD)
Money Market Account
Savings Account
Tim buys $10,000 worth of Apple stock. If he was guaranteed an 8% return for the next 15 years, what would be the present value of that sum, in today's dollars (adjusted for inflation - assuming a 3% annual inflation rate).
$20,360.95
$21,540.74
$10,000
$31,721.69
Michael has just won a prize and has three options for receiving his winnings:
$200,000 immediately
$450,000 in 15 years
$40,000 now and $360,000 in 15 years
Given an estimated average inflation rate of 3% per year, which option provides the greatest purchasing power?
$200,000 today
$450,000 in 15 years
$40,000 today and $360,000 in 15 years
$100,000 today
$300,000 in 15 years
