WorksheetsPF Unit 5 Review Lessons 1,4,6, & 7
Total questions: 12
Worksheet time: 6mins
Jose, Eric, Gabriel, October, and Jazleen are discussing investment strategies. Who's reasoning is incorrect?
Jose believes investing can minimize the impact of inflation, which causes him to lose purchasing power
Eric thinks investing is to earn a consistent rate of return with lower risk than his typical savings account
Gabriel suggests investing is to build wealth by reinvesting his returns and allowing them to compound
October says investing is to earn higher average rates of return than she would in her typical savings account
Bianca has $500 in her piggy bank that she earned from her summer job. She decides to put that money in a savings account that earns 1% annual interest and leaves it there for 5 years. Meanwhile, the cost of her favorite comic books increases by an average of 2% per year due to inflation. What happened to the purchasing power of Bianca's savings?
It increased
It decreased
It stayed the same
It matched inflation
Elijah has just started his first job and is considering investing a small amount of his salary each month. What is the benefit of Elijah starting to invest early, even with a small amount?
Elijah's investments are likely to grow more since compounding means returns get larger over time
Elijah is guaranteed higher returns since compounding reduces the risks of investing
Elijah can use his investments to meet short-term financial goals since he doesn’t need to hold them as long
Elijah can take advantage of brokerage discounts for long-term investors
Bianca, Jazleen, Nico, Eric, and Jayden are discussing about investing in stocks. Who's statement about stocks is FALSE?
Bianca: Owning a stock means you own part of a company
Jazleen: Companies sell stocks to raise money for their business
Nico: Stocks are guaranteed to increase in value over time
Jayden: Stock prices can be affected by things like the news and false rumors
Nico is interested in starting to invest and asks his friends Edgar, Gabriel, Jessica, and Elijah for tips. Who is providing sound advice on how to invest?
Edgar: “You’ve got to time the market. That’s how most people make money investing.”
Gabriel: “Trends are hard to predict, and that makes timing the market difficult.”
Jessica: “You can look at a past trend in a stock and know how it’ll behave in the future.”
Elijah: “Always follow market trends - buy in a bull market and sell in a bear market.”
Gabriel is considering buying shares in a tech startup, Shicco's Tech. If the price of the shares grows as Shicco's Tech grows, how does this benefit Gabriel as an investor?
Gabriel will be able to decide what Shicco's Tech sells and set the price
Gabriel will be able to sell these shares for a higher price and make a profit
Gabriel will be able to enjoy free services from Shicco's Tech
Gabriel will be able to put Shicco's Tech on his resume
Lonnel, Montana, and Edgar are planning to invest their savings. They are considering three common assets for allocation. What could be their choices?
Stocks, bonds, and bond funds
Stocks, bond funds, and mutual funds
Stocks, real estate, and cryptocurrency
Stocks, bonds, and cash
Eric has invested in a bond. The annual interest rate of this bond is called the ______ rate. Can you help Jazleen identify what it is called?
Face value
Coupon
Maturity
Discount
Jayden, Eric, Kayley, Lonnel, and Sanyah are discussing investment strategies. (a) statement is not a benefit of diversification.
Match the following investment types with their typical share price fluctuations.
Jayden's individual stock prices typically fluctuate more than Eric's high-grade bond funds do
High volatility investment
Jayden's individual stock prices typically fluctuate less than Eric's high grade bond funds do
Low volatility investment
Jayden's individual stock prices and Eric's bond funds typically fluctuate almost identically
Similar volatility investment
Jayden's individual stock prices and Eric's bond funds cannot be compared at all
Incomparable investment
October and Israel are planning to calculate the return on investment for their joint venture. They need the (a) and the (b) to perform this calculation.
Casey is considering using historical return data to create his investment portfolio. What is one limitation he might face?
Historical returns are only available for the past month, not any longer time frames
Casey should remember that historical performance does not guarantee that future performance will match
Historical performance data is difficult and costly for Casey to access
Historical return isn’t meaningful for Casey due to inflation
