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2.4.0.M1
Total Points Earned
22 Total Points Possible
Percentage
Directions: Circle the correct answer for each question. (1 point each)
Name
Date
Class
1.
Kylee’s Personal Finance class When has been discussing the importance of understanding liquidity and she is trying to explain the term to another student. Which statement is most correct description of liquidity? a.
how quickly and easily an asset can be converted into cash b.
the amount of savings available c.
a measurement of how much a person or household owns once all debts have been paid d.
the amount of money needed to pay for the necessities and comforts currently enjoyed
2.
When taking advantage of the time value of money, which of the following is most likely to result in the largest return? a.
Invest a large principal amount of money and then make no additional investments. b.
Invest as long as possible and at the highest interest rate possible. c.
Invest a small amount of money for a short period of time at the highest interest rate possible. d.
Invest at a high interest rate because interest is the only factor that affects return.
3.
Compound interest is best defined as: a.
Interest earned on the principal investment b.
Any form of interest earned from saving or investing c.
Earning interest on interest d.
The effect interest has on the total return on investment
4.
Dylan is preparing a presentation about saving and the presentation rubric says that he must include an explanation of compounding interest. Which of the following statements would be the best one to include in his presentation to show that he understands compounding interest? a.
interest earned on the principal investment b.
any form of interest earned from saving or investing c.
earning interest on interest d.
the effect interest has on the total return on investment
© Take Charge Today – August 2013 – Saving and Investing Multiple Choice Test Bank
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona

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2.4.0.M1
5.
When a goal has been set to save $100.00 a month for an emergency fund of $2000.00, giving up food from the vending machine to achieve that goal is the: a.
opportunity cost b.
interest c.
specific part of the SMART goal d.
trade‐off
6.
Which statement best reflects the philosophy of “pay yourself first”? a.
An individual should save whatever money is left over after paying monthly bills. b.
An individual should pay all fixed expenses before paying flexible expenses. c.
An individual should set aside a predetermined amount of money for saving before using any of that money for spending. d.
An individual should spend money on the items and activities enjoyed in life before paying any other expenses
© Take Charge Today – August 2013 – Saving and Investing Multiple Choice Test Bank
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona

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2.4.0.M1
7.
In relation to the other options, how liquid is a savings account? a.
More liquid than cash b.
Less liquid than mutual funds c.
More liquid than a Certificate of Deposit d.
More liquid than a checking account
8.
Hannah needs a savings tool to help her manage her everyday purchases. The savings tool needs to be very liquid and accessible. Which of the following savings tools should Hannah choose? a.
Certificate of deposit b.
Checking account c.
Money market deposit account d.
Any of the above savings tools would help Hannah
9.
Which of the following statements correctly describes the security level of savings tools? a.
Savings tools are not secure because they have a high risk of losing money. b.
Savings tools are secure because they are protected by the U.S. government against loss. c.
Savings tools are very secure because there are not risks involved with saving or investing. d.
None of the above is true. It would be safer to keep the money at home in a shoe box.
10.
Brett plans to save money toward purchasing a car. His co‐worker is telling him about a Money
Market Account he has that offers a tiered interest rate. What is Brett’s co‐worker talking about? a.
The amount of money he earns depends on the balance, i.e. the higher the account balance the higher the interest rate he would earn. b.
The amount of money he earns depends on the number of accounts he has at the depository institution, i.e. the more accounts he has, the higher interest rate he will earn. c.
Brett’s co‐worker is talking about something that is illegal. A tiered account is promoted by scam artists who trick people into investing money in hopes of earning higher rates over time. d.
The rate of interest earned increases over time, i.e. leaving money in the account for 3 months would earn a lower interest rate than leaving money in the account for 12 months.
11.
Which of the following is a feature of a certificate of deposit (CD)? a.
Funds deposited in a CD are held for a certain length of time. b.
Funds deposited in a CD have tiered interest rates. c.
Funds deposited in a CD are very liquid. d.
Funds deposited in a CD can be accessed via check or debit card.
12.
Which of the following is a feature of a money market deposit account? a.
No minimum balance requirements b.
Unlimited transactions every month c.
Tiered interest rates d.
The money must remain in the account for a specific period of time
© Take Charge Today – August 2013 – Saving and Investing Multiple Choice Test Bank
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona

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2.4.0.M1
13.
Harris is concerned about the effects of inflation on his investment returns. Which statement best describes inflation? a.
The rise in the general level of prices b.
The uncertainty about the return on an investment c.
The number of times something happens to money d.
The projected value of an investment at the end of a specified time frame
14.
The most common relationship between risk and return in investing can be stated as: a.
higher risk indicates lower return b.
higher risk indicates higher return c.
lower risk indicates higher return d.
No relationship exists between risk and return
15.
Elliot’s stock broker is suggesting that he consider investing in a diversified portfolio. A diversified portfolio is desirable because it: a.
increases the risk/return ratio b.
limits investors choices to only one or two investment tools c.
indicates an investor is a good predictor of the return an investment will have d.
decreases risk by investing money in a variety of investment tools
16.
Which of the following is not true in regards to investing in stock? a.
A stockholder owns a part of a company. b.
Depending upon the current market price, stockholders may pay different prices for the same stock. c.
A stockholder may or may not receive a dividend. d.
A stockholder will always receive a profit when the stock is sold.
17.
Conner wants to purchase stocks with the money he received from his tax return. Who would he contact to make the transaction? a.
A brokerage firm b.
The New York Stock Exchange c.
A real estate agent d.
Conner should complete this transaction on his own
18.
Which statement is TRUE of mutual funds? a.
Mututal Funds are speculative investments b.
Mutual Funds are diversified investments c.
Mutual Funds are a form of real estate investment d.
Mutual funds are superior purhcasing to a single stock
19.
A bond is: a.
A type of debt that a company issues to investors for a specified period of time. b.
A share of ownership in a company. c.
A type of investment that is only offered by depository institutions. d.
A type of investment that has the potential for significant fluctuations over a short period of time.
© Take Charge Today – August 2013 – Saving and Investing Multiple Choice Test Bank
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona

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2.4.0.M1
20.
Alisa is looking for an investment that is structured to have tax benefits. She should look for information on: a.
Tax rated bonds b.
Speculative investments c.
Index funds d.
Tax‐advantaged investements than the rate of inflation. 21.
It is best to have the rate of return on an investment a.
Lower, in order to minimze taxes b.
Lower, in order ot minimize risk c.
Higher, to maintain purchasing power d.
Higher, to minimize risk
22.
Which of the following statements is true in regards to paying taxes on investments? a.
Since investments are considered unearned income, taxes do not have to be paid on earnings. b.
Taxes are often owed on profits generated from investments. c.
Taxes only have to be paid on employer‐sponsored investment accounts. d.
Taxes are always paid on investments either when the money is placed in the investment or removed from the investment.
© Take Charge Today – Revised August 2013 – Saving and Investing Unit Multiple Choice Test Bank
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona

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2.4.0.C1
© Take Charge Today – Revised August 2013 – Saving and Investing Unit Multiple Choice Test Bank
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona