Investing Answers
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Which investment is best for someone who is likely to need cash soon?
A
mutual fundB
CDC
401(k)D
savings account2
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Why is it risky to invest in a commodity?
A
A commodity has little or no value as a long-term investment.B
Commodity stocks cannot be traded after you purchase them.C
The commodity's price might drop significantly very quickly.D
The investment will tie up your money for more than one year.3
Which is an example of a high-risk investment?
A
stock in a start-up companyB
bondC
CDs from an insured bankD
401(k)4
The image shows Alex’s investments in one year. Investments during One Year
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.5
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.6
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.7
What is the relationship between risk and return?
A
A higher risk often means a higher return.B
A lower risk always means a higher return.C
A higher risk often means a lower return.D
A lower risk will always mean a lower return.8
What is the definition of liquidity?
A
how difficult it is to maximize returns on investmentsB
how much money someone has in a savings accountC
how easily an investment can be exchanged for cashD
how much income someone has to invest each year9
Which investment has the least liquidity?
A
mutual fundB
houseC
checking accountD
small business10
What is the definition of risk?
A
putting money into more than one investmentB
amount made in profit on an investmentC
using borrowed funds for an investmentD
possibility of losing money on an investmentDid you find these answers helpful?
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