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WorksheetsInvesting & Wealth Management - Strand 1 DOK 1 Vocab Review
Total questions: 15
Worksheet time: 8mins
What does the Time Value of Money mean?
Money has the same buying power no matter when you receive it
Money today is worth the same as money in the future
Money today will lose buying power over time if not invested
Money today cannot earn interest
What is simple interest?
Interest earned on both principal and previous interest
Interest earned only on the original amount
Interest added every month
Interest that is always higher than compound interest
What is compound interest?
Interest earned only on the starting amount
Interest earned on both principal and previous interest
Interest paid only once a year
Interest that does not grow
What does "principal" mean in finance?
The person who manages your money
The original sum invested or borrowed
The interest rate on a loan
The total returns from investment
What is the interest rate?
The length of time you must leave money in the bank before making a withdrawal without penalty
The total amount you have saved in your account after several years of investing
The percentage used to figure out how much interest you earn or pay on money over time
The fee you pay to the bank when you open a new savings account or investment fund
A money market account is:
A savings account that usually earns more interest than a regular savings account
A checking account that is used for everyday spending and purchases
A type of loan that helps you pay for buying a house or real estate
An investment account where you can only buy and sell company stocks
A Certificate of Deposit (CD) is:
A deposit that earns interest for a fixed period
An account you can withdraw from any time
A type of insurance
A bond issued by the government
What does asset allocation mean?
Putting all your money into one stock
Dividing investments among different asset types
Choosing only the safest investments
Buying and selling daily
Diversification means:
Investing in only one company
Spreading investments across different assets
Saving money at home
Only buying international stocks
Market risk (systematic risk) is:
Risk that affects the whole market
Risk only for small businesses
Risk from buying risky stocks
Risk that can be fully avoided
Company risk (non-systematic risk) is:
Risk affecting all investments
Risk for one company or industry
Risk from interest rates
Risk only during recessions
Liquidity risk is:
The chance you can’t quickly sell an investment without losing money when you need to
The possibility you will have to pay higher taxes if you sell your investment too soon
The risk that your investment will not earn as much interest as you expected over time
The chance that you will have to pay fees for keeping your investment in a savings account
Opportunity cost means:
The benefit you miss out on when you choose one investment over another available option
The extra taxes you may have to pay when you earn interest from an investment account
The risk that you will lose money if you sell an investment before it matures
The amount of time it takes for your investment to double in value through compounding
PEST Analysis is a tool for:
Assessing external factors like politics, economics, social trends, and technology before investing
Calculating compound interest rates for long-term savings and investments
Measuring how quickly you can sell your investments in the financial markets
Comparing different types of bank accounts to find the best interest rates available
What is a fraudulent investment?
An investment that is approved by the government
A fake or deceptive investment promising high returns with little risk
An investment with a low interest rate
An investment only banks offer
