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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
The main purpose of saving is to have money on hand when needs come up, but investing is to earn pro
B
The main focus of saving is earning interest, but earning interest is not a focus of investing.
C
The interest earnings from investments are usually fixed, while earnings from savings are more chang
D
When money is invested, it is easier to take out than when put into savings.
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
Not being aware of what major future purchases will cost
C
Depending too much on credit
D
Inability to pay current expenses
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 72
B
“Pay yourself first” Rule of Saving
C
Saving and Investing Rule
D
Rule of 70-20-10
4) Kyle bought preferred blue chip stocks and his sister Kitty bought common growth stocks. Which statement about Kyle and Kitty is TRUE?
A
Kyle’s investment would more likely be lost if the company were to have financial difficulties.
B
Kitty is taking a greater risk than Kyle.
C
Kitty will receive a fixed dividend each month; Kyle will not.
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
Piggy bank
B
Savings account
C
Money market account
D
Certificate of deposit
6) What is interest?
A
Stock in a public corporation; returns vary, but higher risk
B
A certificate of deposit stating money has been deposited for a specific time
C
Stock with fixed dividends, less risk
D
Money paid for the use of someone else’s money over a period of time
7) What is a CD?
A
Money paid for the use of someone else’s money over a period of time
B
Stock in a public corporation; returns vary, but higher risk
C
A certificate of deposit stating money has been deposited for a specific time
D
Stock with fixed dividends, less risk
8) What is preferred stock?
A
A savings account in which deposits are invested to yield additional earnings
B
Stock in a public corporation; returns vary, but higher risk
C
Stock that costs less than $1 per share; extremely high risk
D
Stock with fixed dividends, less risk
9) What is common stock?
A
Stock with fixed dividends, less risk
B
Stock that costs less than $1 per share; extremely high risk
C
A savings account in which deposits are invested to yield additional earnings
D
Stock in a public corporation; returns vary, but higher risk
10) What is a Roth IRA
A
An Individual Retirement Account used to save money for retirement
B
A share of ownership and interest in the assets and earnings of a company
C
A personal savings plan; contributions are not tax-deductible; earnings are tax-free
D
Stock with fixed dividends, less risk
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