Econ- Chapter 6 Question Preview (ID: 60042)


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

Government debt securities issued by the U.S. Federal government and is exchanged for a minimum amount of $1,000. The maturity is greater than 20 years.
a) Savings bonds
b) Treasury bill
c) Treasury notes
d) Treasury bonds

Spreading of investments among several different types to lower your overall risk:
a) Opportunity Cost
b) Rational Choice
c) Diversification
d) Profit incentive

Increase in the value of an asset from the time it was bought to the time it was sold:
a) Capital gain
b) Capital loss
c) Immediate value
d) Cost-benefit margin

Decrease in the value of an asset from the time it was bought to the time it was sold:
a) Capital gain
b) Capital loss
c) Immediate value
d) Cost-benefit margin

U.S. government securities backed by the Treasury Department with a maturity of one year or less and is exchanged for a minimum amount of $1,000:
a) Savings bonds
b) Treasury bills
c) Treasury notes
d) Treasury bonds

U.S. government debt security that is exchanged for a minimum amount of $1,000. It has a fixed interest rate and a maturity between two and 10 years:
a) Savings bonds
b) Treasury bills
c) Treasury notes
d) Treasury bonds

A person who buys a stock for $20 and sells it for $30 has earned $10 in:
a) Interest
b) Profit per share
c) Dividends
d) Capital gains

The Dow-Jones Industrial Average is:
a) A mutual fund
b) Another name for the SP 500
c) Traded over-the-counter
d) A stock market index

The Federal Deposit Insurance Corporation (FDIC) insures:
a) Commercial bank accounts
b) Money market accounts
c) Credit union accounts
d) Credit union accounts

One disadvantage of investing in real estate is that such an investment:
a) Does not often increase in value
b) Cannot easily be turned into cash
c) Is not useful when the investor is ready for retirement
d) Causes the investor to have to pay far more in income taxes

You earn more in retirement plans than you would on basic savings because you would:
a) Pay yearly taxes on savings
b) Invest more each year in the retirement plans
c) Invest in the retirement plans for a longer time
d) Receive a higher rate of return on the retirement plans

Treasury bonds:
a) Pay dividends twice a year
b) Are good short-term investments
c) Are tax-exempt bonds that fund municipal projects
d) Are certificates issued by the U.S. Treasury

A 401(k) earns more than the traditional IRA or Roth IRA because:
a) The investor paid no annual tax on the 401(k).
b) The company matched the employee's contributions in the 401(k)
c) All interest earned on the 401(k) was tax-free forever
d) The investor didn't have to take the money out of the 401(k) until retirement

Interest earned on a Roth IRA is:
a) Tax deferred
b) Tax free
c) Taxable upon retirement
d) Taxable up to $2,000 a year

Money market deposit accounts:
a) Are insured by the FDIC
b) Pay lower interest than savings accounts
c) Allow investors to write checks
d) Are also known as stock funds.

It is estimated that every year 20 million American investors do what?
a) Purchase stocks through brokers
b) Purchase government savings bonds
c) Use the Internet to make trades.
d) Invest using over-the-counter markets

Savings bonds sell for less than their face value because:
a) Banks compete to sell them
b) This is how they pay interest
c) They pay dividends twice a year.
d) Interest is tax-exempt

Compared to a stock, a bond provides a:
a) Higher dividend
b) Lower dividend
c) Higher level of risk
d) Lower level of risk

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