Finance Chapter 12 Test
If you're over the age of ___, you need a will.
29
What is the fifth foundation?
Build wealth and give
Be aware of any ____ you might receive, but don't bank on it as a key part of your retirement plan.
Inheritance
Social Security benefits are meant to ____ your income.
Replace 40% of
____ is the process of figuring out how much money you'll need in retirement and creating a plan to get there.
Retirement planning
Roth IRA, 401(k), 403(b), 457, and Simplified Employee Pension are all examples of ____.
Retirement plans
Which of these investment accounts will provide tax-free withdrawals at retirement?
Roth IRA
Which of the following is not considered a true retirement plan?
SIP
Never invest your money in ____ because it/they are extremely risky.
Single stocks
Before you invest, you should make sure a mutual fund has done well for 5-10 years.
True
When you're retired, you'll still have to pay taxes.
True
Giving your money, time, or property to an organization that helps other people who are in need is called ____ giving.
charitable
Preparing a will is just one aspect of effective ____.
estate planning
When it comes to investing, one of the most important things to remember is never invest...
in something you don't understand.
Your collection of investments is called your ____.
portfolio
A fund manager uses a(n) ____ to outline an investing strategy.
prospectus
Diversification reduces ____ by using a mix of investment types in your portfolio.
risk
When it comes to picking investments, the higher the ____, the greater your chance of losing money.
risk
Capitalization (cap) refers to the total value of a company described in one of these three ways:
small, mid, and large cap
Investing your money earns you more money because of...
Compound growth
It's okay to borrow money from your retirement account, but don't borrow money to invest in it.
False
When you invest, your goal is to earn a negative rate of return on investment.
False
You should wait to be generous until you have money to give.
False
Live like no one else now, so later you can live and ____ like no one else.
GIve
____ is the cure for ____.
Generosity; selfishness
You can build a legacy you'll be proud of by...
Giving your time and money to others
For a majority of millionaires, where did their money for retirement come from?
IRA/401(k)
When donating money, you should always...
Identify a cause that matters to you and research the charity thoroughly.
Never ____ something you don't ___.
Invest in; understand
When you invest in a mutual fund, you are contributing to a pool of money that will be...
Invested in a mix of stocks, bonds and money market accounts
When riding in highs and lows of the stock market, remember...
It will level out, so stick with it!
Certificates of deposit and money market accounts are both examples of investments with ____ risk and ____ return.
Low; High
____ refers to the monetary gain or loss of an investment over time.
ROI
The three components of compound growth are money, time and ____.
Rate of return
What does "bull and bear" reference?
The stock market
Mutual funds are less risky and can outperform the stock market because...
They invest in several companies at once.
____ is key when it comes to compound growth.
Time
Why might someone choose to diversify their investments?
To balance high-risk investments with more steady and predictable ones.
Usually, the more liquid an asset is (like cash in the bank), the less return you can expect.
True
When using a Roth plan, you invest your money after paying taxes, and the investment grows tax-free.
True
An extended time of falling stock values is referred to as a(n) ____.
bear market
A(n) ____ is a payout of net profits from a company to shareholders.
dividend
Cash in a bank savings account is a good example of a(n) ____.
liquid asset
A security that represents part ownership of a company is call a(n) ____
stock
Owning ____ means you own a small piece (or pieces) of a company.
stock
The S&P 500 is one example of a(n) ____.
stock market index
