WorksheetsInvesting
Total questions: 20
Worksheet time: 10mins
Select the best definition of compound interest.
Compound interest is earning interest on the original amount you deposited
Compound interest is earning interest on the original amount you deposited plus any interest earned
Compound interest is the amount of interest you are charged on your bank account each month
Compound interest is earning a fixed dollar amount on your bank account each month
What is a stock?
A stock is a share of ownership in a company.
A stock is a lending investment to the government or a company.
A stock is an insured bank account with high risk.
A stock is a type of investment that uses money from investors to purchase many different investment types.
What type of market is described by a receding economy and a decline in the stock market?
Bear Market
Bull Market
Pig Market
Sheep Market
What is the current trading price of McDonald's stock?
$188.50
$186.75
$24.43
$1.75
Duncan plans to invest all of his money in individual stocks. Why is this likely a bad investment strategy?
He will need a large amount of money to invest in individual stocks.
Purchasing individual stocks has a very low amount of risk and a low return.
He will need to open multiple brokerage accounts for each stock he purchases.
Purchasing individual stocks has a high amount of risk and little diversification.
Which statement best describes the risk level of bonds?
Bonds are one of the riskiest investment types, but have the potential for a high return.
Bonds have a moderate amount of risk, but are a riskier investment when compared to stocks.
Bonds have a low to moderate amount of risk and are less risky than stocks.
Bonds have no risk.
What is one way you can earn money by investing in bonds?
Through interest collected on your original investment.
Through dividends.
By selling your shares in the bond.
By purchasing a diversified bond type.
Dahlia is 24 years old. She makes $85,000 per year, has a fully funded Emergency Fund, and extra income each month. What should be her investor risk level?
Conservative
Moderate
Aggressive
Average
Which of the following is a characteristic of an index fund?
High fees
Insured
Diversified
Professionally managed
Your friend Jamal is 14 and wants to begin investing. He has taxable income from working at his uncle's sporting goods store. What type of account would you advise him to open?
A traditional savings account
A custodial brokerage account
A custodial Roth IRA
A 401k
Mariam is young, willing to take a moderate amount of risk, but most importantly, wants an investment that is low-cost and diversified. Which is the best investment type for Mariam?
A bond
An individual stock
A savings account
An index fund
Which statement best describes how diversification impacts risk when you are investing?
Diversification means spreading your money across multiple investments, which decreases risk.
Diversification means spreading your money across multiple investments, which increases risk.
Diversification means putting all of your money into one investment, which decreases risk.
Diversification means putting all of your money into one investment, which increases risk.
What is one requirement to open a Custodial IRA account?
You must be 18 years old.
You must also open a savings & checking account.
You must have a valid driver's license.
You must have taxable income or wages.
Why is it important for you to understand YOUR risk tolerance before you start investing?
It is recommended that people with a low risk tolerance shouldn't invest at all.
If you have a high risk tolerance, you will likely pay less in investment fees.
You should create an investment portfolio that includes an amount of risk you are comfortable with.
You must be willing to take a high amount of risk to begin investing.
Select the levels of risk.
Aggressive
Moderate
Conservative
Bearish
What is the best investing strategy?
Buy low, sell low
Buy high, sell high
Buy low, sell high
Read the scenario, then determine which rule should Kemisha use when investing.
Kemisha is 22 years old engineer. Kemisha lives with her parents and drives her parents car. Kemisha makes an annual salary of $120,000. What rule should Kemisha use to determine how to invest in stocks and bonds?
120 minus her age rule
50/50 rule
60/40 rule
What is Supply and Demand?
What is the difference between simple and compound interest?
Why are index funds better than investing in an individual stock?
Index funds are better than investing in an individual stock because they offer diversification.
