WorksheetsChapter 8 Review
Total questions: 26
Worksheet time: 13mins
A single stock would be a good place to keep your emergency fund.
True
False
Diversification lowers risk with investing.
True
False
The Fifth Foundation is: Build Wealth and Give.
True
False
Always invest money in anything you do not understand.
True
False
Money market investments are low-risk, and therefore, have low returns.
True
False
Pre-tax contributions are taken from your gross income before taxes.
True
False
Name three types of Employer Retirement Plans.
401(k), 403(b), and SIMPLE IRA
Roth IRA, Traditional IRA, and SEP IRA
Pension Plan, Profit Sharing Plan, and Cash Balance Plan
Defined Benefit Plan, Defined Contribution Plan, and Hybrid Plan
What is diversification in investing?
A. A technique that involves investing all money in a single stock
B. A risk-management technique that mixes various investments in a portfolio
C. A strategy to avoid investing in the stock market
D. A method of only investing in bonds
What is a key characteristic of a Roth IRA?
It's funded with pre-tax money
Withdrawals are always taxed
It's funded with after-tax money
Only employers can contribute
According to the text, what should you never do when investing?
Use diversification strategies
Invest in mutual funds
Use borrowed money
Invest in tax-free accounts
What type of retirement plan is typically found in non-profit organizations?
401(k)
457
403(b)
SEP
What is the recommended action if you leave a job with money in your employer's retirement plan?
Cash out immediately
Leave it with the former employer
Direct rollover into an IRA
Transfer to a checking account
Name the three major stock exchanges in the United States:
New York Stock Exchange, NASDAQ, and Chicago Stock Exchange
New York Stock Exchange, NASDAQ, and American Stock Exchange
New York Stock Exchange, NASDAQ, and London Stock Exchange
New York Stock Exchange, NASDAQ, and Tokyo Stock Exchange
What is day trading?
Long-term investment strategy
Daily buying and selling of stocks through speculation
Trading only during business hours
Trading mutual funds daily
What is a bear market?
A. A market trending upward
B. A market trending downward
C. A stable market
D. A new market
What percentage should each asset class represent in a properly diversified mutual fund portfolio?
10%
15%
20%
25%
Why should you avoid borrowing from your retirement plan?
It's illegal
You lose potential investment earnings
The interest rates are too high
It affects your credit score
What is a CD (Certificate of Deposit)?
A high-risk investment vehicle
A type of mutual fund
A time-deposit savings account with higher interest rates
A stock market investment tool
A list of your investments
401(K)
Investment
Liquidity
Portfolio
Quality of an asset that permits it to be converted quickly into cash without loss of value
401(K)
Investment
Liquidity
Portfolio
Account or arrangement in which one would put their money for long-term growth
401(K)
Investment
Liquidity
Portfolio
A retirement savings plan offered by a corporation to its employees; the employee contributes money from his/her gross pay, and the money grows tax deferred
401(K)
Investment
Liquidity
Portfolio
A piece of ownership in a company, mutual fund or other investment
IRA
Mutual Fund
Risk
Share
Tax-deferred arrangement for individuals with earned income; individual retirement arrangement
IRA
Mutual Fund
Risk
Share
Degree of uncertainty of return on an asset
IRA
Mutual Fund
Risk
Share
Pool of money managed by an investment company and invested in multiple companies
IRA
Mutual Fund
Risk
Share
