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Saving And Investing
Test Description: Personal Finance Unit 5 Quiz Review
Instructions: Answer all questions to get your test result.
1) Which of the following is a good reason to have a financial reserve that's larger than normal? (Select the best answer.)
A
You have mostly discretionary expenses.
B
You would be able to find another job quickly if you lost yours.
C
You have a large monthly car payment.
D
Your income is fairly predictable.
2) What is compounding interest? (Select the best answer.)
A
interest that's added to the principal of an account
B
interest that doubles the principal of an account
C
interest that's not calculated on a regular basis
D
interest gained only on the principal of an account
3) What is opportunity cost? (Select the best answer.)
A
the value of an investment opportunity when it's compared with all the other investments you've made in the past
B
the value of an investment opportunity you pass up in order to take another investment opportunity
C
the principal in an investment account
D
the total amount of investments in a portfolio
4) What is a volatile investment? (Select the best answer.)
A
an investment that can change quickly without warning
B
an investment that gains value slowly over time
C
an investment that requires a high volume of investors
D
an investment that is fairly low risk
5) Which portion would not be part of an investment portfolio? (Select the best answer.)
A
a savings account
B
commodities funds
C
a savings 529 plan
D
equity investments in a company
6) When is your risk tolerance lowest? (Select the best answer.)
A
when you are concerned about the diversity of your investment portfolio
B
when you first make the investment
C
when you are an inexperienced investor
D
when you are closest to needing the money you invested
7) What piece of information is most helpful when you're comparing investments? (Select the best answer.)
A
the total return dollar amounts
B
the initial investment amounts
C
the ROI dollar amounts
D
the ROI percentages
8) How does an equity investor make money? (Select the best answer.)
A
selling many investments at the same time
B
depositing money in compounding accounts
C
lending money and charging interest
D
selling an investment for more than they paid for it
9) What is a stock? (Select the best answer.)
A
a partial ownership in a company
B
a group of real estate investments
C
a government investment
D
a regular payment a company issues investors
10) Which policy is a way the SEC protects investors? (Select the best answer.)
A
requiring companies to disclose financial information
B
helping investors diversify their portfolios
C
guaranteeing the value of certain stocks
D
insuring the amounts of people's investments
11) Which example is an investment commodity? (Select the best answer.)
A
microfinancing
B
steel
C
shares in a company
D
a rare painting
12) Which option allows you to pool your money and invest in a portfolio with other investors? (Select the best answer.)
A
a 401(k) plan
B
a mutual fund
C
a 529 plan
D
an IRA account
13) Which piece of information is typically included in a stock listing? (Select the best answer.)
A
the predicted price of the stock over the next year
B
the company's SEC registration credentials
C
the number of shares of stock sold in the previous year
D
the number of shares of stock sold in a previous day
14) Which type of investment income happens when an investor sells ownership in an equity investment that's gained value? (Select the best answer.)
A
capital gains
B
equity gains
C
dividends
D
interest
15) What is the New York Stock Exchange? (Select the best answer.)
A
an index for measuring the performance of stocks
B
an indicator of how certain stocks may perform in the future
C
the world's largest exchange for trading stocks and other securities
D
a stock market where trades take place exclusively over computers
*select an answer for all questions
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