WorksheetsInvesting, Risks, and Retirement Test Review
Total questions: 26
Worksheet time: 13mins
Name
Class
Date
1.
What does owning a stock mean?
a)
You manage the company
b)
You loan money to a company
c)
You own a small part of a company
d)
You guarantee profit from a company
2.
What is the stock market?
a)
A government savings program
b)
A group of markets where stocks are bought and sold
c)
A place where banks store money
d)
A type of retirement account
3.
What is the main purpose of a stock market index?
a)
To guarantee returns for investors
b)
To replace individual stocks as investments
c)
To measure the performance of part of the stock market
d)
To guarantee stock losses for investors
4.
Which index tracks 500 large U.S. companies?
a)
Dow Jones
b)
S&P 500
c)
NASDAQ
d)
Russell 2000
5.
What happens during a bull market?
a)
Economic confidence decreases
b)
Investors leave the market
c)
Stock prices rise
d)
Stock prices fall sharply
6.
What happens during a bear market?
a)
Everyone makes money
b)
Investing becomes risk free
c)
Stock values increase by 20 percent
d)
Prices decline over time
7.
Why is jumping out of the stock market during downturns a bad idea?
a)
Indexes stop working
b)
Long term growth happens over time
c)
The government blocks re entry
d)
Prices never recover
8.
Which investment usually has the lowest risk and lowest return?
a)
Certificates of deposit
b)
Aggressive growth funds
c)
Real estate
d)
Single stocks
9.
Why are single stocks considered risky?
a)
They depend on the success of one company
b)
They cannot be sold
c)
They always lose money
d)
They are illegal for beginners
10.
What happens if a company goes bankrupt and you own its stock?
a)
You keep earning interest
b)
The stock turns into a bond
c)
You may lose your investment
d)
The government replaces the money
11.
What is a bond?
a)
Ownership in a company
b)
A retirement plan
c)
A loan to a company or government
d)
A type of savings account
12.
Why do mutual funds reduce risk?
a)
They avoid the stock market
b)
They guarantee profit without a doubt
c)
They invest in many companies at once
d)
They are insured by banks
13.
Which investment is best suited for long term retirement goals?
a)
Mutual funds
b)
Checking accounts
c)
Cash at home
d)
Emergency fund
14.
What does having a portfolio mean?
a)
A tax form
b)
A retirement age
c)
A list of your debts
d)
A list of your investments
15.
Why is investing early important in growing retirement accounts?
a)
Returns are instant
b)
Markets always close
c)
Compound growth needs time
d)
Risk disappears quickly
16.
What happens if money is taken from an IRA before age 59 and a half
a)
Taxes are removed
b)
Nothing
c)
A penalty is charged
d)
Extra interest is earned
17.
How does a traditional 401k reduce taxes now
a)
Withdrawals are tax free - basically free money
b)
Contributions are pre-tax - reduces your taxable income
c)
Employers pay all taxes - you pay zero
d)
Money is taxed before investing - no taxes later
18.
What is a major benefit of a Roth 401k or Roth IRA?
a)
Your employer controls all of the money
b)
Tax free growth and withdrawals - no taxes later!
c)
You don't make any investment choices
d)
Penalties increase at retirement age
19.
Why is an employer retirement savings match considered free money?
a)
It totally replaces your income
b)
It removes all investment risk
c)
It adds money you did not earn
d)
It guarantees profit for everyone
20.
What does diversification mean?
a)
Spreading money across different investments
b)
Timing the market
c)
Avoiding the stock market
d)
Investing all money in one stock
21.
Why does diversification reduce risk?
a)
Risk is eliminated
b)
Returns are fixed
c)
Losses can be balanced by gains
d)
All investments move the same way
22.
Which mutual fund type has the highest risk and potential return?
a)
Aggressive growth
b)
Growth and income
c)
Mid cap growth
d)
Bond fund
23.
Why is borrowing from a 401k discouraged?
a)
Repayment deadlines exist
b)
Penalties may apply
c)
Money stops growing
d)
All of these reasons
24.
What is the main goal of investing?
a)
Paying taxes
b)
Avoiding work
c)
Short term spending
d)
Building long term wealth
25.
How does generosity connect to wealth building?
a)
The money you give creates more joy than it could ever buy
b)
It replaces saving or investing entirely
c)
It prevents income growth because you don't have any money left
d)
It increases risk due to potential scams
26.
Which statement best shows the connection between investment choice and wealth?
a)
Saving cash builds wealth faster than investing
b)
Long term diversified investing supports steady wealth growth
c)
Higher risk always means higher wealth
d)
Investing only works for wealthy people
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