Answers OC27 Economics-2102310-Sem-MeadowsPrinciples of Investment

Investment Strategies Answers

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Who regulates markets where investments are traded?

individual investors

the federal government

corporate entities

financial institutions

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Ida is 25 years old and invests a one-time lump sum of $10,000 in her company's 401(k), which earns an average annual return of 6% compounded annually.Using the Rule of 72, about how many years will it take for Ida's investment to double?

2 years

6 years

10 years

12 years

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?

Tina can start investing the whole amount this year at 5% interest.

Tina can start investing the whole amount this year at 7% interest.

Tina can start investing half of the amount two years from now at 5% interest.

Tina can start investing half of the amount two years from now at 7% interest.

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

Employers create them and match employee contributions.

People can contribute to the account until retirement age.

People can withdraw money penalty-free at any time.

Contributions to the account are limited each year.

Contributions reduce taxable income.

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

Invest in stocks because they are less risky.

Put most of your money in a savings account instead.

Spread your investments in several different areas.

Stick with the stocks because they will bounce back.

Which is a commodity someone might invest in?

a mutual fund

natural resources

government bonds

a certificate of deposit

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?

by enrolling in a 401k and investing in the stock market

by opening a savings account and investing in commodities

by buying CDs and US government bonds

by opening an IRA and investing in a new business

People who make money investing in the stock market

get certain tax breaks.

should sell quickly to avoid taxes.

have to pay a fee to keep a stock.

must pay taxes on profits.

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 US savings bond

a savings account

a commodity

a certificate of deposit

The graph shows examples of investments with high and low liquidity.

knows they will need cash in the near future.

knows they will need cash years from now.

wants to have a guaranteed source of income.

wants to have higher returns on their investment.

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Investment Strategies Answers

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