AnswersHSA 26-27 EconomicsInvestment Strategies

Investment Strategies Answers

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21
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Which statements are true regarding a traditional individual retirement account? Choose three answers.

A
Employers create them and match employee contributions.
B
People can contribute to the account until retirement age.
C
People can withdraw money penalty-free at any time.
D
Contributions to the account are limited each year.
E
Contributions reduce taxable income.
22
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A couple has decided to increase their income from investments for when they retire in twenty years. Which is the best way they can accomplish that goal?

A
by enrolling in a 401k and investing in the stock market
B
by opening a savings account and investing in commodities
C
by buying CDs and US government bonds
D
by opening an IRA and investing in a new business
23

William is not generally a risk-taker, but he knows he may need to step out of his comfort zone to make enough money for retirement.Which investment option would best meet William’s needs?

A
a US savings bond
B
a savings account
C
a commodity
D
a certificate of deposit
24

Which of these are considered both short- and long-term investments? Select four options.

A
CDs
B
stocks
C
savings accounts
D
mutual funds
E
bonds
F
commodities
25

The images show what happened to two people who invested $1,000. Which investment advice would Gale most likely give to Alex?

Question illustration
A
Invest in stocks because they are less risky.
B
Put most of your money in a savings account instead.
C
Spread your investments in several different areas.
D
Stick with the stocks because they will bounce back.
26

Which investment has the least liquidity?

A
property
B
stocks
C
a savings account
D
a 401k
27

Tina has $1,000 per year she can invest to save money for her future.Which option would allow the highest growth for Tina's investment?

A
Tina can start investing the whole amount this year at 5% interest.
B
Tina can start investing the whole amount this year at 7% interest.
C
Tina can start investing half of the amount two years from now at 5% interest.
D
Tina can start investing half of the amount two years from now at 7% interest.
28

Which is a commodity someone might invest in?

A
a mutual fund
B
natural resources
C
government bonds
D
a certificate of deposit
29

[BLANK]

A
diversified
B
sunk
C
lost
D
wasteful
30

Which investor is making a common error?

A
an employee of a popular hardware store who invests only in that company’s stock
B
an employee of a popular software company who invests in many similar companies
C
someone who sells the slumping stock while they are still able to make a profit based on what they paid
D
someone who buys stock in both domestic and more risky international companies

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