Personal Finance 8.01 Question Preview (ID: 14527)
Personal Finance 8.01.
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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) Fixed dividends
c) Less chance of losing his investment
d) Possibility of higher earnings
How are savings and investments different? Savings are:
a) less secure than investments.
b) more liquid than investments.
c) more risky than investments.
d) more volatile than investments.
What do saving and investing have in common?
a) Both are designed primarily to make a large profit.
b) Both are usually risk-free.
c) Both may be used to get ready to pay big expenses.
d) Both yield high rates of interest.
Max bought penny stocks and Nancy bought blue chip stocks. Which statement about Max and Nancy is TRUE?
a) Max paid a higher price per share than Nancy paid.
b) Max bought stock in a large, stable company.
c) Nancy is taking a much higher risk than Max.
d) Nancy paid more for her stocks, but has less risk.
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) Over-relying on credit for expenses
b) Rule of 70-20-10
c) Rule of 72
d) View saving and investing as a fixed expense
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) Pay yourself first Rule of Saving
b) Rule of 70-20-10
c) Rule of 72
d) Over-relying on credit for expenses
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) pay yourself first
b) Rule of 70-20-10
c) Rule of 72
d) Saving and Investing Plan
How are savings and investments different?
a) Savings earn high rates of interest, but investments do not.
b) Savings have changeable rates of interest, but investment interest rates are fixed.
c) Savings involve low risk factors, but the risks with investments are greater.
d) Investments may be withdrawn at any time, but savings may not be easy to access.
How are saving and investing different?
a) Investors want to be able to easily access their money, while those who save do not.
b) People save so they can pay for unexpected needs; they invest to make a profit.
c) People who save tend to be better risk-takers than those who do not.
d) People who save tend to earn larger returns on their money than those who invest.
What do saving and investing have in common?
a) Both allow money to be withdrawn at any time.
b) Both are known for their safety and low level of risk.
c) Both involve putting money into a savings account.
d) Both may be used to help reach financial goals.
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