WorksheetsSaving and Investing
Total questions: 50
Worksheet time: 4hrs 58mins
Why do people NOT save money?
they lack discipline
they do not live on a budget
they lack focus
all of the above
At your age, a fully funded emergency fund should be:
$500
$5,000
$100
$1,000
The first thing you should save for is your retirement fund.
true
false
Instead of borrowing money for large purchases, you should set money aside in a _________ over time and pay with cash.
emergency fund
sinking fund
credit card fund
mortgage fund
Percentage paid to a lender for the use of borrowed money, or the percentage earned on invested principal.
Interest Rate
Savings Rate
inflation
change
Which of these is NOT a key to saving money?
Focus
Making saving a habit and a priority
Your income
Discipline
Interest paid on interest previously earned.
Compound Interest
Interest
Your income level greatly affects your saving habits.
True
False
Americans typically maintain a very high savings rate.
True
False
You should save money for three basic reasons: emergency fund, purchases and wealth building.
True
False
Money set aside and left alone for a ʺrainy day.ʺ
Emergency Fund
Savings Account
Interest earned should not be a factor with your emergency fund because __________________.
Inflation can eat up the interest earned
Interest-bearing accounts at banks earn a high rate of interest, therefore, interest is not a concern
The emergency fund is not intended to grow wealth
None of the above
You should hold off on investing for retirement until you have college or other post-secondary education paid for.
True
False
You should keep your emergency fund in the same account as your spending money.
True
False
When you’re in high school, you won’t have the same emergency expenses as your parents.
True
False
When you’re older and out of school, you’ll need to grow your emergency fund into a full ____ to _____ monthsʹ worth of expenses.
1 to 2
2 to 4
3 to 6
6 to 12
Why is having a fully funded emergency fund so important when it comes to your financial well-being?
If you have a good job, you don't need an
emergency fund.
The emergency fund is to set money aside for unexpected financial emergencies and provide a sense of financial security.
The emergency fund is to have money for large purchases, like vacations.
None of the above
Saving is about:
Contentment and emotion
Contentment and earning more money
Making more money and discipline
Pride and greed
For which of the following should you save?
Purchases
Wealth building
Emergency fund
All of the above
Using the sinking fund approach, how much do you have to save each month to buy a $3600 car one year from now?
$400
$300
$275
$500
Which of the following is not one of the three basic reasons for saving money?
Emergency fund
Large purchases
Have money available to lend to friends
Build wealth
Money today has different buying power than the same amount of money in the future.
Interest
Time Value of Money
Inflation
Where did money go
Securities that represent part ownership or equity in a corporation.
The government agency responsible for regulating the stock market.
Internal Revenue Service
NASDAQ
Federal agency responsible for collecting taxes and for the interpretation and enforcement of the Internal Revenue Code.
New York Stock Exchange
NASDAQ
Please label each part of the function with the appropriate description.
ending balance
principal or initial balance
interest rate
compounding period
time (in years)
Emilee has $2000 to deposit in an investment account that will triple every year. How much money will Emilee have in 5 years?
(year 1 = 2000 x 3 = 6000
year 2 = 6000 x 3 = 18000
year 3 =
year 4 =
year 5 =
(a)
(Using the simple interest formula- I = Prt) Nadia's portfolio includes a bond fund that has an average annual growth of 5.45% per year. If she invests $1000, how much interest will she accrue after 23 years? Round to the nearest cent.
$219.36
$12.53
$1253.50
$2349.67
Choose THE FORMULA that works best to solve this problem.
Ruiz invested $3,500 at 6 % compounded quarterly for 18 years. What is the ending balance after all compounded interest has been earned?
Click on the part of the formula that represents the initial balance or the principal.
Click on the part of the formula that represents the number of times per year interest is compounded.
Bob and Kathy invest a total of $5000 initially for retirement. They invest into an account that pays 3.9% interest, compounded monthly. How much will they have invested in 24 years? (Use the compounded interest formula).
$12,729.48
$122,102.34
$1,051.17
$5004.14
Evelyn invested $24,000 in a savings account for eight years. The account has an interest rate of 5.7% compounded continuously. Using the simple interest formula (I= Prt), what is the interest earned on her investment?
$10,944
$13,866.01
$34,944
$37,866.01
What is the first baby step in Dave Ramsey's 7 Baby Steps?
Save $1,000 for a starter emergency fund
Invest in stocks
Pay off all debt
Buy a new car
What is the second baby step in Dave Ramsey's 7 Baby Steps?
Pay off all debt except for the house using the debt snowball method
Start a college fund for the kids
Invest in the stock market
Buy a new car
According to Dave Ramsey, how much should you save for your emergency fund in Baby Step 3?
3 to 6 months' worth of expenses
1 to 2 weeks' worth of expenses
No need to save for an emergency fund
12 to 18 months' worth of expenses
What is the fourth baby step in Dave Ramsey's 7 Baby Steps?
Pay off all debt using the debt snowball
Invest 15% of your household income into Roth IRAs and pre-tax retirement plans
Buy a new car with the extra income
Start saving for your children's college fund
What does Dave Ramsey advise to do with your mortgage in Baby Step 6?
Stop making mortgage payments
Refinance to a longer term
Take out a second mortgage
Pay off your mortgage early
What is the final baby step in Dave Ramsey's 7 Baby Steps?
Build wealth and give generously
Invest in risky ventures and be stingy with money
Spend recklessly and give nothing
Live on a strict budget and save aggressively
What does Dave Ramsey recommend as the best way to pay off debt in Baby Step 2?
Debt avalanche method
Minimum payments only
Borrowing more money
Debt snowball method
Find the simple interest earned for principal of $2,000 at and 8% rate for 5 years.
$160
$800
$80,000
$16
Ike invests $7,660 in an account paying 7.27% simple interest annually. How much interest has Ike gained after four years?
A. $222.75
B. $2,227.53
C. $1,392.20
D. $13,922.05
A
B
C
D
Mason invested $5000 in a savings account offering an interest rate of 3.75%
for a period of 25 years.
The interest is compounded monthly.
What will be the future balance of Mason's account?
$12712.31
$12,749.30
$12,657.59
$12550.84
