WorksheetsWayground - Investing pt 1 ?'s 1-50 (WB ch 11 & KA Unit 7
Total questions: 50
Worksheet time: 47mins
Stocks are a form of
Owning
Lending
Bonds are a form of
Owning
Lending
Mutual Funds are a form of
Owning
Lending
Index Funds are a form of
Owning
Lending
Real Estate is a form of
Owning
Lending
Speculative Investments are a form of
Owning
Lending
The possibility that an investment will fail to pay the expected return or fail to pay a return at all.
Inflation
Inflation Risk
Investment Risk
Risk
The rise in the general level of prices.
Inflation
Inflation Risk
Investment Risk
Risk
The uncertainty regarding the outcome of a situation of event.
Inflation
Inflation Risk
Investment Risk
Risk
The danger that money won’t be worth as much in the future as it is today.
Inflation
Inflation Risk
Investment Risk
Risk
All of the following are examples of how the purpose of investing is different than the purpose of saving EXCEPT
Investments help to build Net Worth
Investments are assets purchased with a goal of increasing value or providing additional income
Investments are assets that are meant to keep your money in a safe place without the risk of loosing money.
Investments are usually used to pay for long term goals.
Which of the following has the HIGHEST Risk associated?
Bonds
Stock and Real Estate
Speculative
Mutual Funds and Indexes
Which of the following has the LOWEST Risk associated?
Bonds
Stock and Real Estate
Speculative
Mutual Funds and Indexes
True or False: When focusing on wealth accumulation, the rate of return earned on an investment should be higher than the rate of inflation.
True
False
True or False: An individual’s investment philosophy changes throughout their lifetime.
True
False
True or False: Individuals with an aggressive investment philosophy are not willing to take on risk for the potential of higher returns.
True
False
True or False: Portfolio diversification is a method that helps an individual receive the highest return on investment.
True
False
True or False: In order to buy and sell investments (except for real estate and certain speculative investments), an individual needs to utilize a brokerage firm.
True
False
True or False: A full service general brokerage firm usually charges lower commission fees than a discount broker.
True
False
If the price of a stock has increased the last 10 years, will it definitely go up this current year?
Yes
No
When you are looking at how to diversify your investment portfolio, a having a low-risk conservative strategy will usually make more money than balancing your investments between high risk, medium risk, and low risk investments.
Yes
No
Why do you earn less money using simple interest than you would using compound interest?
No difference
With compound interest, you earn interest on top of the interest that you already earned.
With simple interest your investments are safer and earn more money in the bank.
Which of these has the most risk?
Savings Account
Mutual Funds
Stocks
Bob is looking for a place to invest money he will need in 3-4 months. Is it a good idea to tell him that stocks are the best place to invest because they're great short term investments.
Yes
No
Saving is putting cash aside so it can be used very quickly if needed.
Yes
No
Stocks are a share of ownership in a company that could go up or down. Bonds are a loan to a company or government that pays interest.
Yes
No
Kyle says pensions and 401(k)s offer you “free money.” What does he mean by this?
Companies will match you or give you extra money for investing in the company retirement plan.
It is money you get for doing nothing.
It is money you can use at any time for any reason.
Pensions and 401Ks give tax breaks
All of these investors invest $5,000 per year. Which investor will retire with the most money?
Chris (blue)
Susan (grey)
Bill (green)
If Susan invested $50,000 and Bill invested $150,000. Why did Susan have a higher balance at the age of 65?
Susan started earlier and had more time to get compound interest
Susan had better investments
Susan made riskier investments that paid more in the long run
What are some other reasons outside of compound interest, age and length of savings that older people would have a higher percentage of 300K+ savings for retirement?
They usually have had more time to get higher paying jobs in their careers and make more money.
The system favors the older generation
Less disposable income
You start investing at age 25 instead of age 20, how much more money do you need to invest per month to have $1M at retirement?
$140 more per month
$40 more per month
$240 more per month
$4 more per month
Time is one of the most powerful tools when investing
Yes
No
TIME is important when investing because:
More compounding can occur
The market goes up and down short-term, but usually goes up over the long-term
Allows for a long-term approach to growing wealth
All of these are true
If you want to keep the money you make, the rate of return earned on an investment should be higher than the rate of inflation.
Yes
No
This economic force allows your money to grow quickly without doing anything but saving/investing it.
Compounding
Diversification
Inflation
Duration
If you desire your money to double in 6 years, what rate of return would you need to earn? (Hint...rule of 72)
12%
8%
10%
9%
Investing can be defined as putting your money to work over the long term, by buying and holding assets that will grow from compound interest.
Yes
No
Which of the following are TRUE about Index Funds?
Index funds are a type of mutual fund that have lower fees than actively managed mutual funds.
Index funds try to "beat the market." and are actively managed by fund managers.
Index funds are a type of mutual fund that are actively managed by fund managers.
Index funds try to "beat the market." and usually have high fees
Mutual funds have more diversification than individual stocks.
Yes
No
Diversification means having only one type of investment or many investment that are very similar
Yes
No
Bonds are a great way to diversify an investment portfolio in case the stock market should go down.
Yes
No
Explain why investing in both stocks and bonds is important.
Bonds pay less money but have less risk. Stocks usually have higher returns but higher risk. Investing in both stocks and bonds gives you balance.
Bonds pay more money but have less risk. Stocks usually have lower returns but higher risk. Investing in both stocks and bonds gives you balance.
Bonds pay less money but have more risk. Stocks usually have higher returns but lower risk. Investing in both stocks and bonds gives you balance.
Diversifying what you invest in is usually a good way to help manage risk.
Yes
No
What would be an example of risk from investing in stock shares?
A famous billionaire tweets about your company and the stock price goes up
You cannot sell stocks until they reach the maturity date.
You can owe money if the stock goes negative
The CEO of the company gets caught doing something illegal and the stock price goes down.
A Stockbroker is a company or person that actually buys and sells stocks off the stock exchange for investors. Investors put in orders, but they make the trades.
Yes
No
Mutual funds are a smaller group of stocks, bonds, and/or cash managed by a professional.
Yes
No
What is a difference between an actively managed fund and a passively managed fund.
An actively managed fund is managed by a person or a group of people. A passively managed fund is managed by a computer algorithm.
An actively managed fund is managed by a computer algorithm. A passively managed fund is managed by a person or a group of people.
An actively managed fund is good. A passively managed fund is bad.
An actively managed fund is bad. A passively managed fund is good.
A bond issued by a company and a bond market index fund are the same thing.
Yes, both have fixed interest rates that have steady returns over time
No, a bond has a fixed interest rate, but bond Index funds can go up and down with the market
Yes, the only difference is that one is big and one is small.
Many money advisors believe that avoiding all or most risk is very risky behavior. (For example investing in only bonds is "riskier" than investing in a mix of stocks and bonds)
Yes
No
