Name __________________
Date____________
Hour________
Standard 5 Study Guide
Saving and Investing
1. True or False: Savings and investing is important for people of all income levels.
2. Inflation refers to an overall _______________________ in prices.
3. If you are planning to put aside money for long-term goals, which is your best bet?
(Circle A or B)
A. Putting your money in a savings account because it is insured.
B. Putting your money into a mutual fund because it is diversified.
4. Default Risk is the potential that you will not get your money back once it is _________.
5. Stocks and corporate bonds are similar in that both have relatively ______ levels of risk.
6. Compound Interest is calculated as principle plus any ___________ they have already
paid you.
7. Do low interest rates increase or decrease the amount of time needed to double your
money? ___________.
8. True or False: It is better to wait until interest rates are high to start saving.
9. When saving or investing, the principle is the ______________ amount of money
deposited for investing.
10. Liquidity is defined as how easy it is to turn an item into cash without __________ any
money.
11. Deciding whether to save $50 dollars or buy a pair of shoes illustrates _______________
____________________.
12. Money market mutual funds are designed to provide ______________ rates of return
than _______________ accounts as the money is invested in very short-term
investments with a low risk.
13. Which of the following BEST describes diversifying a portfolio? (Circle A or B)
A. Buying stocks every year in same company.
B. Buying stocks in several different companies.
14. Investing in a mutual fund to spread your risk is a good idea if you have a ______ risk
tolerance.
15. Even though stock purchases have high risk, they are still a good investment to reach
_______-term goals.
16. True or False: Taking the time to review your investments and make adjustments in your
portfolio is just as important as reviewing your personal and financial goals?
17. The rule of 72 is an easy way to determine how long it will take your money to double
using _________________ ________________.
Name __________________
Date____________
Hour________
18. Which form of interest gives you the greatest return? (Circle A or B)
A. Simple
B. Compound
19. True or False: An average rate of return on an investment shows past performance and
how it might perform in the future.
20. Government savings bonds are backed by the _______________________, so there is
little or no default risk.
21. If your account is earning 6% interest, it will take ________ years for your money to
double.
22. Which of the following items is liquid?
a. Money is in a savings account.
b. A new Car.
c. Money invested in a CD.
d. Money invested in real estate.
23. How much money will you have at the end of 5 years if your principal is $100 and your
interest rate is 10% (Simple interest)? _______________
24. If you plan to go skiing next winter, your best choice for saving money is: ( circle A or B)
A. Buying Stock.
B. Putting money in a savings account.
25. How much money will you have at the end of 5 years if your principal is $100 and your
annual compound interest rate is 10%? _______________