Saving & Investing

Conner wants to purchase stocks with the money he received from his tax return. Who would he contact to make the transaction?

A brokerage firm

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.

19. A bond is:

A type of debt that a company issues to investors for a specified period of time.

Which statement best reflects the philosophy of "pay yourself first"?

An individual should set aside a predetermined amount of money for saving before using any of that money for spending.

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?

Checking account

Compound interest is best defined as:

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.

It is best to have the rate of return on an investment __________ than the rate of inflation.

Higher, to maintain purchasing power

When taking advantage of the time value of money, which of the following is most likely to result in the largest return?

Invest as long as possible and at the highest interest rate possible.

In relation to the other options, how liquid is a savings account?

More liquid than a Certificate of Deposit

Which statement is TRUE of mutual funds?

Mutual Funds are diversified investments

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.

Which of the following statements is true in regards to paying taxes on investments?

Taxes are often owed on profits generated from investments.

Alisa is looking for an investment that is structured to have tax benefits. She should look for information on:

Tax‐advantaged investements

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?

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.

Harris is concerned about the effects of inflation on his investment returns. Which statement best describes inflation?

The rise in the general level of prices

Which of the following is a feature of a money market deposit account?

Tiered interest rates

Elliot's stock broker is suggesting that he consider investing in a diversified portfolio. A diversified portfolio is desirable because it:

decreases risk by investing money in a variety of investment tools

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?

earning interest on interest

The most common relationship between risk and return in investing can be stated as:

higher risk indicates higher return

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?

how quickly and easily an asset can be converted into cash

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:

trade‐off