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Personal Finance (Unit 5 - Part 2)
Test Description: Part 2
Instructions: Answer all questions to get your test result.
1) Harris is concerned about the effects of inflation on his investment returns. Which statement best describes inflation?
A
The projected value of an investment at the end of a specified time frame
B
The uncertainty about the return on an investment
C
The rise in the general level of prices
D
The number of times something happens to money
2) Which is a feature of a money market deposit account?
A
The money must remain in the account for a specific period of time
B
Tiered interest rates
C
Unlimited transactions every month
D
No minimum balance requirements
3) Which statement is true of mutual funds?
A
Mutual funds are superior purchasing to a single stock.
B
Mutual funds are diversified investments.
C
Mututal funds are speculative investments.
D
Mutual funds are a form of real estate investment.
4) Alisa is looking for an investment that is structured to have tax benefits. She should look for information on:
A
speculative investments.
B
tax-advantaged investments.
C
tax-rated bonds.
D
index funds.
5) In relation to other options, how liquid is a savings account?
A
Less liquid than mutual funds
B
More liquid than cash
C
More liquid than a certificate of deposit
D
More liquid than a checking account
6) Which is not true with regard to investing in stock?
A
Depending upon the current market price, stockholders may pay different prices for the same stock.
B
A stockholder may or may not receive a dividend.
C
A stockholder will always receive a profit when the stock is sold.
D
A stockholder owns a part of a company.
7) In relation to the rate of inflation, it is best to have the rate of return on an investment:
A
higher, to maintain purchasing power.
B
lower, in order to minimize risk.
C
higher, to minimize risk.
D
lower, in order to minimze taxes.
8) Which statement is true with regard to paying taxes on investments?
A
Taxes only have to be paid on employer-sponsored investment accounts.
B
Taxes are often owed on profits generated from investments.
C
Since investments are considered unearned income, taxes do not have to be paid on earnings.
D
Taxes are always paid on investments either when the money is placed in the investment or removed from the investment.
9) When a goal has been set to save $100.00 a month for an emergency fund of $2,000.00, giving up food from the vending machine to achieve that goal is the:
A
trade-off.
B
opportunity cost.
C
specific part of the SMART goal.
D
interest.
10) Hannah needs a savings tool to help her manage her everyday purchases. The savings tool needs to be very liquid and accessible. Which savings tool should Hannah choose?
A
Any of the above savings tools
B
Money market deposit account
C
Checking account
D
Certificate of deposit
*select an answer for all questions
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