WorksheetsUnit 7 Investing Review
Total questions: 52
Worksheet time: 32mins
How is investing different than saving?
Investing involves putting money into assets with the expectation of earning a return, while saving is setting aside money for future use with little or no risk.
Investing is only for wealthy people, while saving is for everyone.
Saving always earns more money than investing.
Investing and saving are exactly the same.
What is liquidity? What is an example of something liquid? Illiquid?
Liquidity is how quickly an asset can be converted to cash; cash is liquid, real estate is illiquid.
Liquidity is how much interest an asset earns; stocks are liquid, bonds are illiquid.
Liquidity is the amount of money in a savings account; gold is liquid, cash is illiquid.
Liquidity is the risk level of an asset; mutual funds are liquid, savings accounts are illiquid.
How would an individual decide which investments are the right choice?
By considering their financial goals, risk tolerance, and time horizon.
By choosing the investment with the highest price.
By investing only in what their friends recommend.
By picking investments at random.
A student is considering investing in real estate but is concerned about needing quick access to their money. Based on what you know, what should the student consider?
Real estate is not liquid, so it may be difficult to access money quickly.
Real estate allows for instant cash withdrawals.
Real estate has no entry costs.
Real estate is always risk-free.
If a person or business pays a fee to use your property, what is this method of making money called?
Rent
Dividend
Commission
Subsidy
Suppose you bought a property for $100,000 and sold it for $150,000. Which term best describes the $50,000 profit you made?
Capital gains
Rent
Depreciation
Tax
What is an annuity commonly used for?
Retirement income
Buying a house
Paying for college
Emergency expenses
If someone wants to invest a lump sum for future payments, which financial product described would be suitable?
Annuity
Checking account
Credit card
Student loan
As the risk of an investment increases, what happens to the potential return?
The potential return decreases
The potential return stays the same
The potential return increases
The potential return disappears
Which of the following statements is true about speculative investments?
They always guarantee a return
They are less volatile over a short period of time
There is no guarantee that an investment will pay an expected return
They are risk-free
Which of the following is typically a reason people collect collectibles?
For pleasure, but may also offer an opportunity for profit
To use them in daily life
To throw them away
To eat them
What is a "future" in financial terms?
An agreement to buy or sell a specific commodity or currency at a set price in the future
A loan given to a company for expansion
A type of savings account with a fixed interest rate
A government bond with a maturity date
Which of the following is an example of a commodity?
Wheat
Smartphone
Car insurance
Movie ticket
Why are futures considered very risky investments?
Because the price of the commodity or currency can change significantly before the contract is fulfilled
Because they guarantee a profit
Because they are insured by the government
Because they are only available to banks
What is a viatical investment?
A business buys life insurance policies from terminally ill patients for a percentage of the face value.
Buying and selling real estate for profit.
Investing in government bonds for long-term returns.
Purchasing gold and silver as a hedge against inflation.
What does day trading involve?
Buying and selling securities in a short period of time based on price fluctuations.
Holding stocks for several years to gain dividends.
Investing in mutual funds for retirement.
Purchasing insurance policies for long-term security.
What are some ways to invest in precious metals?
Stocks, mutual funds, ETFs, coins and bars, futures and options
Real estate, bonds, savings accounts
Art, antiques, collectibles
Technology stocks, cryptocurrencies, patents
Why was the Securities and Exchange Commission (SEC) created?
To regulate securities markets and protect investors
To run public schools
To manage national parks
To oversee agricultural production
How does inflation factor into investing?
Inflation decreases the real value of investment returns.
Inflation always increases investment returns.
Inflation has no effect on investments.
Inflation guarantees higher profits.
How can you make money investing?
By earning interest, dividends, or capital gains.
By spending all your money.
By keeping money in a non-interest account.
By avoiding all risks.
How does investment philosophy change throughout your lifespan?
Younger people may take more risks, while older people may prefer safer investments.
Investment philosophy never changes.
Older people always take more risks.
Younger people avoid investing.
What makes something a good or bad investment?
Factors like risk, return, liquidity, and alignment with goals.
Only the amount of money invested.
The popularity of the investment.
The color of the investment certificate.
What is a stock market?
A place where groceries are sold.
A platform for the exchange of services.
A venue where stocks and bonds are traded.
A website for buying and selling cars.
What does the term "bull market" refer to?
A market in decline.
A market showing sustained increase in stock prices.
A market dominated by bearish investors.
A market where stocks are traded for animals.
What is investing?
Putting your money under your mattress
Spending all your money on toys
Letting your money grow over time by buying things that could increase in value
Giving all your money to a friend
Nike, Disney, and Microsoft are all examples of what type of stock?
Penny Stock
Value Stock
Blue Chip Stock
Aggressive Stocks
What does it mean to diversify your investment portfolio?
To invest all your money in one stock
To buy stocks only in the technology sector
To spread your investments across various assets
To invest in the stock market only
What does it mean if a stock's value goes up?
The company is losing money
The stock is becoming less popular
The company is likely doing well financially
The interest rate on savings accounts has increased
A person who is interested in earning investment income from stocks is generally advised to buy stocks that pay _____.
dividends
premiums
interest
awards
What is the stock market?
A place where companies' debts are bought and sold
A place where groceries are traded
A place where stocks, or shares of ownership in companies, are bought and sold
A savings account offered by banks
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 a portfolio?
A case for carrying loose papers
A collection of investments owned by an individual or an institution
A type of mutual fund
A detailed plan of a company's future investments
What is a dividend?
A fee charged for buying stocks
A type of stock
A payment made by a corporation to its shareholders
A loan from a corporation to its shareholders
What is the S&P 500?
A stock exchange
A single stock
An index that measures the stock performance of 500 large companies listed on stock exchanges in the United States
A government bond
What is a blue-chip stock?
A stock from a company that is not well-known
A stock that is very risky
A stock from a financially strong and well-established company
A stock that has a blue chip
What is a mutual fund?
A fund that invests in a single stock
A fund that only lends money to companies
A pool of money managed by professionals that is invested in various securities
A government-controlled investment fund
Which is a true statement about ticker symbols?
They are only given to companies on the New York Stock Exchange
They are made up of the first three letters of a company's name
They uniquely identify a company
They identify the kind of stock
Choose the type of investment that carries a lower amount of risk.
Mutual Funds
U.S. Government Treasury Bills
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
What is the primary advantage of investing in a mutual fund?
Guaranteed profits.
Professional management of the fund.
Ability to withdraw money at any time without penalty.
Fixed interest rates.
Mutual funds have diversified stocks & bonds.
True
False
What does ETF stand for?
Exchange-Traded Fund
Equity Trading Fund
Exchange-Traded Finance
Electronic Trading Fund
What is the main difference between ETFs and mutual funds?
ETFs are bought and sold through the fund company, while mutual funds are traded on an exchange.
ETFs and mutual funds must invest in different asset classes.
ETFs and mutual funds have different investment strategies.
ETFs are traded on an exchange, while mutual funds are bought and sold through the fund company.
A quick way to estimate how long it takes for your money to double is called...
rule of 72
compound interest
simple interest
inflation
You start with $1000. You place it in an account earning 3% per year.
When will it double?
24 years
12 years
33 years
You start with $1000. You place it in an account earning 3% per year.
It will double after 24 years, how much will you have?
$2000
$3000
$24,000
How long would it take to double money in a account with a 2% interest rate?
36 years
144 years
72 years
What type of mutual fund would be most appropriate for a person who wants an international mutual fund without the risks associated with stocks?
Balanced Fund
Growth Fund
Global Stock Fund
Global Bond Fund
What type of mutual fund would be most appropriate for a person who wants to invest in stocks from around the world?
Balanced Fund
Global Bond Fund
Global Stock Fund
Regional Stock Fund
What type of mutual fund would be most appropriate for a person who is interested in long-term growth for future financial security?
Balanced Fund
Global Stock Fund
Growth Fund
Income Fund
What type of mutual fund would be most appropriate for a retired person who desires investment earnings to provide for current living expenses?
Balanced Fund
Growth Fund
Income Fund
Industry Fund
