Personal Finance
Why is it important to save money in liquid assets?
-To provide easily accessible money in case of an emergency. -To provide a foundation for financial security -To help pay for unanticipated expenses.
How much do financial investors recommend that individuals keep in a savings account for emergencies?
6 months of expenses
Using the "Rule of 72," how many years will it take to double one's money at an 8% rate of return?
9
Which of the following is not true in regards to investing in stock?
A stockholder will always receive a profit when the stock is sold.
What does "pay yourself first" mean?
An individual sets aside a predetermined portion for savings before spending.
Simple interest is best defined as:
Any form of interest paid from saving and investing.
You need a savings tool that is liquid and accessible, which one should you choose?
Checking account
Which shows the best understanding of compound interest?
Earning interest on interest.
Which of the following is a feature of a Certificate of Deposit (CD).
Funds deposited in a CD are held for a certain length of time.
When taking advantage of the time value of money, which of the following is most likely to result in the largest amount of return.
Invest a large principal amount of money and then make no additional investment.
Interest is considered the price of what?
Money
You are saving for Spring Break vacation in six months. Which savings tool should she choose?
Money market deposit account
Savings is best defined as:
Portion of current income not spent on consumption
What are 5 examples of savings tools?
Savings account, money market deposit account, certificate of deposit, interest-earning checking account and savings bond
When comparing and contrasting savings and investing, which of the following is true?
Savings provides the foundation for financial security, while investing is used to pay for long-term goals, such as retirement
Which of the following statements correctly describes the security level of savings tools?
Savings tools are secure because they are protected by the U.S. government against loss.
Inflation is best defined as the:
Steady rise in the general level of prices
Which of the following is a feature of a money market deposit account?
Tiered interest rates
You want to purchase stocks with the money you receive from your tax return. Who would you contact to make transactions?
a full-service or discount brokerage firm
What is good about a diversified portfolio?
decreases risk by investing money in a variety of investment tools
The function of the Federal Deposit Insurance Corporation is to _____.
insure member depository institutions against loss.
In relations to others options, how liquid is a savings account?
more liquid that a certificate of deposit (CD).
When a goal has been set to save $100 a month for an emergency fund of 2000,00, giving up food from a vending machine is an example of a
specific part of the S.M.A.R.T. goal
What is a liability?
the amount of savings available.