AnswersGA-GSE Personal Finance and EconomicsInvesting

Investing Answers

13 verified answers3 views
1
Free Preview

Which statements apply to a certificate of deposit (CD)? Choose two answers. It is always purchased as a short-term investment.It can be purchased from a banking institution.It is always purchased as a long-term investment.It can be purchased for almost any amount.It is purchased through an individual's employer.

A
It is always purchased as a short-term investment.
B
It can be purchased from a banking institution.
C
It is always purchased as a long-term investment.
D
It can be purchased for almost any amount.
E
It is purchased through an individual's employer.
2
Free Preview

What is the definition of liquidity?

A
how difficult it is to maximize returns on investments
B
how much money someone has in a savings account
C
how easily an investment can be exchanged for cash
D
how much income someone has to invest each year
3

Which is an example of a high-risk investment?

A
stock in a start-up company
B
bond
C
CDs from an insured bank
D
401(k)
4

When investors purchase a commodity, they believe

A
the commodity's price will go up after purchase.
B
the bank will pay interest to the investors.
C
the investors' employer will match the cost.
D
the commodity is guaranteed to make them money.
5

Which statement best describes stocks?

A
They should be purchased when prices are high and sold when prices are low.
B
They are an investment in a company’s progress and profits.
C
They are a type of investment that includes raw materials and natural resources.
D
They should be purchased only as long-term investments.
6

The image shows Alex’s investments in one year. Investments during One Year

Question illustration
A
He should have invested in a commodity instead of a stock.
B
He would have lost more with a higher-risk investment.
C
He most likely would have benefited by diversifying.
D
He most likely would have profited by buying more of the stock.
7

How is a savings account most useful?

A
for saving for a long time without withdrawing
B
for depositing and withdrawing money frequently
C
for using money for CDs and other investments
D
for using money in the near future but not right away
8

What might convince an investor to buy stock or mutual funds?

A
belief that a company has just reached its peak popularity
B
news that a stock's price has recently increased significantly
C
belief that a small number of investors have bought the stock so far
D
news that a company is about to release a promising product
9

retirementvacationsrainy daysemergencies

A
retirement
B
vacations
C
rainy days
D
emergencies
10

In what way does a 401(k) differ from an individual retirement account (IRA)?

A
A 401(k) is created through an individual’s employer.
B
A 401(k) can be created by individuals who deposit money.
C
A 401(k) allows consumers to contribute before taxes.
D
A 401(k) is a good long-term investment strategy.
11

The image shows Gale's investments during one year. Investments during One Year

Question illustration
A
If she had purchased only the stock and had not diversified her investments, she would have lost money.
B
If she had diversified her investments further, her profits would have been considerably larger.
C
If she had put money in her savings account only and had not diversified, her profits would grow.
D
If she had diversified her investments further, she would have reduced her risk but made less of a profit.
12

Which investment is best for someone who is likely to need cash soon?

A
mutual fund
B
CD
C
401(k)
D
savings account
13

Someone who diversifies investments is more likely to

A
increase both risks and returns.
B
offset their losses with gains.
C
reduce both risks and returns.
D
increase liquidity of investments.
14

What is the definition of liquidity?

A
how difficult it is to maximize returns on investments
B
how much money someone has in a savings account
C
how easily an investment can be exchanged for cash
D
how much income someone has to invest each year
15

Which investment has the least liquidity?

A
mutual fund
B
house
C
checking account
D
small business
16

The pie graph shows sources of income for people ages 65 and over in 2010.

Question illustration
A
largest source of income.
B
smallest source of income.
C
second largest source of income.
D
fourth largest source of income.
17

The image shows Alex’s investments in one year. Investments during One Year

Question illustration
A
He should have invested in a commodity instead of a stock.
B
He would have lost more with a higher-risk investment.
C
He most likely would have benefited by diversifying.
D
He most likely would have profited by buying more of the stock.
18

Which statements apply to a certificate of deposit (CD)? Choose two answers.

A
It is always purchased as a short-term investment.
B
It can be purchased from a banking institution.
C
It is always purchased as a long-term investment.
D
It can be purchased for almost any amount.
E
It is purchased through an individual's employer.
19

How is a savings account most useful?

A
for saving for a long time without withdrawing
B
for depositing and withdrawing money frequently
C
for using money for CDs and other investments
D
for using money in the near future but not right away
20

Which of these investments may be long term? Choose four answers.

A
savings accounts
B
mutual funds
C
bonds
D
retirement funds
E
commodities

Did you find these answers helpful?

More from this Course

Quiz
16 verified answers

Understanding Checking and Debit Accounts

Quiz
15 verified answers

Unit Test

Quiz
10 verified answers

Investing