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Personal Finance 8.01
Test Description: Personal Finance 8.01
Instructions: Answer all questions to get your test result.
1) John and Larry were each given $1,000. John invested his money in savings bonds. Larry invested in growth stocks. What is an ADVANTAGE of Larry's decision over John's?
A
Easier access to money
B
Less chance of losing his investment
C
Fixed dividends
D
Possibility of higher earnings
2) How are savings and investments different? Savings are:
A
more liquid than investments.
B
more volatile than investments.
C
more risky than investments.
D
less secure than investments.
3) What do saving and investing have in common?
A
Both are usually risk-free.
B
Both are designed primarily to make a large profit.
C
Both yield high rates of interest.
D
Both may be used to get ready to pay big expenses.
4) Max bought penny stocks and Nancy bought blue chip stocks. Which statement about Max and Nancy is TRUE?
A
Nancy is taking a much higher risk than Max.
B
Max bought stock in a large, stable company.
C
Nancy paid more for her stocks, but has less risk.
D
Max paid a higher price per share than Nancy paid.
5) Samantha saved $75 a month, even in December, when she wanted to buy holiday gifts for her family and friends. Which rule for saving and investing does this BEST illustrate?
A
View saving and investing as a fixed expense
B
Rule of 70-20-10
C
Rule of 72
D
Over-relying on credit for expenses
6) When Meredith received her first paycheck, she decided to set aside money to buy a car before spending any of the income. Which does this BEST illustrate?
A
Over-relying on credit for expenses
B
Pay yourself first Rule of Saving
C
Rule of 70-20-10
D
Rule of 72
7) The Haleys calculated that it would take 30 years to double the money they invested in a retirement account. Which rule for saving and investing does this BEST illustrate?
A
Saving and Investing Plan
B
Rule of 72
C
pay yourself first
D
Rule of 70-20-10
8) How are savings and investments different?
A
Savings earn high rates of interest, but investments do not.
B
Savings involve low risk factors, but the risks with investments are greater.
C
Investments may be withdrawn at any time, but savings may not be easy to access.
D
Savings have changeable rates of interest, but investment interest rates are fixed.
9) How are saving and investing different?
A
People who save tend to be better risk-takers than those who do not.
B
People save so they can pay for unexpected needs; they invest to make a profit.
C
People who save tend to earn larger returns on their money than those who invest.
D
Investors want to be able to easily access their money, while those who save do not.
10) What do saving and investing have in common?
A
Both are known for their safety and low level of risk.
B
Both may be used to help reach financial goals.
C
Both involve putting money into a savings account.
D
Both allow money to be withdrawn at any time.
*select an answer for all questions
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