Saving and Investing
Standard 5
Test Review
If you need to save for a
vacation, where should you put
your money?
Savings Account
Who backs government savings
bonds?
U.S. Government
How much risk is involved when
you purchase a government
savings bond?
Little or no default risk
What type of risk is involved in
purchasing stocks?
High Risk
What is a good investment for
long-term goals?
Stocks
_____ is how easy it is to turn an
item into cash without losing any
money.
Liquidity
What is the potential that you
will not get your money back
once it is invested
Default Risk
What is one of the best options
to put aside money for long-term
goals?
A mutual fund
Why is a mutual fund a good
option to put your money in for
long-term goals?
It is diversified
What is the original amount of
money deposited for investing?
Principal
Investing in a mutual fund is
good for someone with a
Low-risk tolerance
What shows past performance
and how it might do in the
future?
Average Rate of Return
How much money will you have
at the end of three years if your
principal is $50 and your interest
rate is 10%? (simple interest)
$50 * 10% = $5
$50 * 10% = $5
$50 * 10% = $5
$50 + $5 + $5 + $5 = $65
Which is more liquid?
Money in a savings account
or
Money invested in real estate
Money in a savings account
Which form of interest provides
the greatest return?
compound
Buying stocks in several different
companies is known as
Diversifying a portfolio
True or False
Low interest rates decrease the
incentive to save.
True
True/False
A savings account is best for
meeting short-term goals.
True
True/False
It is better to wait until interest
rates are high to start saving.
False
True/False
Investing tends to have a higher
risk than savings, resulting in
potentially higher rates of return.
True
What is an overall increase in
prices?
inflation
What would increase the amount
of time needed to double your
money?
Low Interest Rates
What are designed to provide
higher rates of return than
savings accounts as the money is
invested in very short-term
investments with a low risk?
Money Market Mutual Funds
What is an easy way to
determine how long it will take
your money to double using
compound interest?
The Rule of 72
True/False
Taking the time to review your
investments and make
adjustments in your portfolio can
be an expensive and time
consuming process.
False
True/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.
True
Deciding whether to go to a
concert or to save illustrates
Opportunity Cost
What has a relatively high level
of risk?
Stocks and Bonds
What type of interest is
calculated as principal plus any
interest they have already paid
you?
Compound
True/False
Savings and investing is only for
wealthy people.
False
True/False
Savings is only for people with
high levels of income and
investing is for people with
limited income.
False
True/False
Savings and investing is
important for people of all
income levels.
True
True/False
Savings is only for people with
limited income and investing if
for people with high levels of
income.
False