Answers2027 Ignite Financial Literacy-Personal Finance - EL3403Investing

Investing Answers

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1
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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
2
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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.
3

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
4

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.
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

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.
7

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.
8

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.
9

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)
10

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

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

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