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WorksheetsInvestment Management- Unit 1
Total questions: 38
Worksheet time: 20mins
Which type of bond is issued by the U.S. government and is considered one of the safest investments due to its full faith and credit backing?
Corporate bond
Municipal bond
Treasury bond
Junk bond
What term describes the strategy of spreading investments among different types of assets or asset classes to reduce risk?
Asset allocation
Portfolio diversification
Risk management
Capital preservation
What is the term for a diversified portfolio of stocks and bonds that is managed by professionals on behalf of investors?
Mutual Fund
ETF (Exchange-Traded-Fund)
Certificate of Deposit (CD)
Hedge Fund
Liquidity means_________
How quickly you will get cash
How quickly you can convert into Cash
How quickly you can market
How well you will get returns
Investment is the ____.
Net addition made to the nation’s capital stock
Person’s commitment to buy a flat
Employment funds on assets to earn return.
Employment of funds on goods and services that are used in production process.
How can investors receive compounding returns?
By selecting a savings account that has a higher interest rate
By investing their earnings back into their original investment
By transferring their earnings into a high-risk investment
By diversifying their investment portfolio
Diversification is important in investing because…
It helps you to balance your risk across different types of investments.
It increases your overall risk, which guarantees that you will make more money.
It ensures that you only make low-risk investments.
It helps you gain the highest rate of return despite any risks.
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
Investors nearing retirement will typically shift their investment portfolios to include ________ risk investments.
lower
moderate
higher
None of the above
Which investment is the most risky?
bond
stock
mutual fund
savings account
Which type of investment is the least risky?
stock
bond
mutual fund
savings account
What is the principal?
beginning amount of money invested or borrowed
extra money paid over time for borrowing money
ending amount, total balance, current value
when you leave money in the bank and it makes money
What is the interest?
beginning amount of money invested or borrowed
extra money paid over time for borrowing money
ending amount, total balance, current value
when you leave money in the bank and it makes money
When it comes to money, the terms saving and investing can be used interchangeably, but it is important to understand they have stark differences.
true
false
The process of putting cash aside so it can be used in the short term and on minimal notice.
investing
savings
The process of putting your money to work over the long term by buying and holding assets that will grow from compound interest.
investing
savings
Types of assets bought and held as an investment include all BUT:
stocks
bonds
mutual funds
money market accounts
What is the average annual return for savings?
0-2%
2-4%
4-6%
6-10%
In the short term, savings and investing don't appear to look that different in terms of return. In the long run, investing uses the power of _______ interest to provide superior returns.
simple
compound
Holding cash and savings provides almost no return but has the ____ risk.
lowest
highest
Investments come with volatility (risk) which means that returns can vary each year.
true
false
Investors that buy and hold over a long period of time (10+ years) have historically seen lower returns.
true
false
A loan to a large organization like a government or corporation and it pays interest to the holder and can be bought and sold is:
bond
mutual fund
stock
hard asset
A fund that may own multiple assets, and it is managed by a professional investor.
bond
mutual fund
stock
hard asset
It is recommended that an individual has an emergency fund established before investing. This emergency fund should have enough money to cover ___________ months of your expenses.
0-3
2-5
3-6
4-7
Investing guarantees you will grow your wealth
True
False
__________ is the probability of loss
inflation
risk
investment
Inflation is ...
an increase in the value of a dollar over time
a decrease in the cost of living over time
an increase in the cost of living over time
the biggest curse word in personal finance (DO NOT PICK THIS ANSWER)
