PF 8.01 Question Preview (ID: 15296)
8.01 Questions And Vocab.
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How are saving and investing different?
a) The main focus of saving is earning interest, but earning interest is not a focus of investing.
b) The main purpose of saving is to have money on hand when needs come up, but investing is to earn pro
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.
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 much on credit
b) Depending too heavily on his insurance
c) Inability to pay current expenses
d) Not being aware of what major future purchases will cost
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) “Pay yourself first” Rule of Saving
b) Rule of 70-20-10
c) Rule of 72
d) Saving and Investing Rule
Kyle bought preferred blue chip stocks and his sister Kitty bought common growth stocks. Which statement about Kyle and Kitty is TRUE?
a) Kitty is taking a greater risk than Kyle.
b) Kitty will receive a fixed dividend each month; Kyle will not.
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.
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) Certificate of deposit
b) Money market account
c) Piggy bank
d) Savings account
What is interest?
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 in a public corporation; returns vary, but higher risk
d) Stock with fixed dividends, less risk
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 in a public corporation; returns vary, but higher risk
d) Stock with fixed dividends, less risk
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 that costs less than $1 per share; extremely high risk
d) Stock with fixed dividends, less risk
What is common stock?
a) Stock with fixed dividends, less risk
b) Stock that costs less than $1 per share; extremely high risk
c) Stock in a public corporation; returns vary, but higher risk
d) A savings account in which deposits are invested to yield additional earnings
What is a Roth IRA
a) An Individual Retirement Account used to save money for retirement
b) A personal savings plan; contributions are not tax-deductible; earnings are tax-free
c) A share of ownership and interest in the assets and earnings of a company
d) Stock with fixed dividends, less risk
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