PF 5.00 Saving And Investing (2 Of 2) Question Preview (ID: 34833)


5.00 Saving And Investing. TEACHERS: click here for quick copy question ID numbers.

The most common relationship between risk and return in investing can be stated as:
a) higher risk indicates higher return
b) higher risk indicates lower return
c) lower risk indicates higher return
d) No relationship exists between risk and return

Which of the following statements is true in regards to paying taxes on investments?
a) Taxes are often owed on profits generated from investments
b) Since investments are considered unearned income,no taxes
c) only have to be paid on employer‐sponsored investments
d) paid on investments when the money is placed in or removed

Which statement is TRUE of mutual funds?
a) Mutual Funds are diversified investments
b) Mututal Funds are speculative investments
c) Mutual Funds are a form of real estate investment
d) Mutual funds are superior purhcasing to a single stock

Compound interest is best defined as:
a) Earning interest on interest
b) Any form of interest earned from saving or investing
c) Interest earned on the principal investment
d) The effect interest has on the total return on investment

Compound interest is …..
a) earning interest on interest
b) any form of interest earned from saving or investing
c) interest earned on the principal investment
d) the effect interest has on the total return on investment

Which statement best reflects the philosophy of “pay yourself first”?
a) set aside money for saving before doing any spending.
b) pay all fixed expenses before paying flexible expenses.
c) save whatever money is left over after paying monthly bills
d) spend money on items enjoyed in life before other expenses

In relation to the other options, how liquid is a savings account?
a) More liquid than a Certificate of Deposit
b) Less liquid than mutual funds
c) More liquid than cash
d) More liquid than a checking account

Which of the following is most likely to be a feature of a money market deposit account?
a) Tiered interest rates
b) Unlimited transactions every month
c) No minimum balance requirements
d) Money remains in the account for a specific period of time

It is best to have the rate of return on an investment __ than the rate of inflation.
a) Higher, to maintain purchasing power
b) Lower, in order to minimize risk
c) Lower, in order to minimze taxes
d) Higher, to minimize risk

To save for an emergency fund, giving up vending machine food to achieve that goal is the:
a) trade‐off
b) interest
c) specific part of the SMART goal
d) opportunity cost

Which is structured to have tax benefits?
a) Tax‐advantaged investements
b) Speculative investments
c) Index funds
d) Tax rated bonds

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