Investing Answers
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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.2
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Which of these investments may be long term? Choose four answers.savings accountsmutual fundsbondsretirement fundscommodities
A
savings accountsB
mutual fundsC
bondsD
retirement fundsE
commodities3
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.4
Which investment is best for someone who is likely to need cash soon?
A
mutual fundB
CDC
401(k)D
savings account5
Which investment has the least liquidity?
A
mutual fundB
houseC
checking accountD
small business6
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.7
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.8
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 investment9
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 year10
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.Did you find these answers helpful?
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