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PF 8.01
Test Description: 8.01 questions and vocab
Instructions: Answer all questions to get your test result.
1) How are saving and investing different?
A
When money is invested, it is easier to take out than when put into savings.
B
The main focus of saving is earning interest, but earning interest is not a focus of investing.
C
The main purpose of saving is to have money on hand when needs come up, but investing is to earn pro
D
The interest earnings from investments are usually fixed, while earnings from savings are more chang
2) Avery is self-employed and does seasonal work, so there are times when he cannot pay all his bills and still set aside money for savings. This is an example of which reason indivi
A
Depending too heavily on his insurance
B
Inability to pay current expenses
C
Depending too much on credit
D
Not being aware of what major future purchases will cost
3) Sheila earns $200 a week. She spends $140 on school expenses, puts $40 in her piggy bank, and uses $20 toward the purchase of bonds. Which rule of saving and investing is this?
A
Rule of 70-20-10
B
Rule of 72
C
Saving and Investing Rule
D
“Pay yourself first” Rule of Saving
4) Kyle bought preferred blue chip stocks and his sister Kitty bought common growth stocks. Which statement about Kyle and Kitty is TRUE?
A
Kitty will receive a fixed dividend each month; Kyle will not.
B
Kitty is taking a greater risk than Kyle.
C
Kyle’s investment would more likely be lost if the company were to have financial difficulties.
D
Kyle probably paid less for his shares of stock than Kitty.
5) Calvin wants to invest his money in a way that he will not be tempted to withdraw and spend it. Which would MOST LIKELY be the best option for Calvin?
A
Savings account
B
Certificate of deposit
C
Money market account
D
Piggy bank
6) What is interest?
A
Money paid for the use of someone else’s money over a period of time
B
Stock with fixed dividends, less risk
C
Stock in a public corporation; returns vary, but higher risk
D
A certificate of deposit stating money has been deposited for a specific time
7) What is a CD?
A
Money paid for the use of someone else’s money over a period of time
B
A certificate of deposit stating money has been deposited for a specific time
C
Stock with fixed dividends, less risk
D
Stock in a public corporation; returns vary, but higher risk
8) What is preferred stock?
A
Stock in a public corporation; returns vary, but higher risk
B
A savings account in which deposits are invested to yield additional earnings
C
Stock with fixed dividends, less risk
D
Stock that costs less than $1 per share; extremely high risk
9) What is common stock?
A
Stock with fixed dividends, less risk
B
A savings account in which deposits are invested to yield additional earnings
C
Stock in a public corporation; returns vary, but higher risk
D
Stock that costs less than $1 per share; extremely high risk
10) What is a Roth IRA
A
A personal savings plan; contributions are not tax-deductible; earnings are tax-free
B
A share of ownership and interest in the assets and earnings of a company
C
An Individual Retirement Account used to save money for retirement
D
Stock with fixed dividends, less risk
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