Principles of Investment

Question 1

What should an investor consider when making an investment? Check all that apply.the rate of inflation, which could affect the value of the returnthe history of the investment, which will indicate the level of riskany taxes that will need to be paid at the state and federal levelsthe nominal interest rate, which will show the real profit to be madethe length of the investment, because long term always means high riskthe level of risk, because the higher it is, the higher the potential loss is

Revolt · Accepted Answer

A: the rate of inflation, which could affect the value of the return; B: the history of the investment, which will indicate the level of risk; C: any taxes that will need to be paid at the state and federal levels; F: the level of risk, because the higher it is, the higher the potential loss is

Question 2

This investment is best considered

Revolt · Accepted Answer

B: high risk with the potential for a high return.

Question 3

Which statement best explains the interest rates related to this CD?

Revolt · Accepted Answer

B: The nominal interest rate is 3 percent, while the real interest rate is 1 percent.

Question 4

How much interest will Michael earn on this CD in the first year, based on the nominal interest rate?

Revolt · Accepted Answer

B: $600

Question 5

How much interest will Michael earn on this CD in the first year, based on the real interest rate?

Revolt · Accepted Answer

A: $200

Question 6

✔ $200$400$600

Revolt · Accepted Answer

A: ✔ $200

Question 7

What is most likely to happen as a result of the change in interest rates?

Revolt · Accepted Answer

B: The market will experience more demand and the price of houses will go up.

Question 8

What should an investor consider when making an investment? Check all that apply.the rate of inflation, which could affect the value of the returnthe history of the investment, which will indicate the level of riskany taxes that will need to be paid at the state and federal levelsthe nominal interest rate, which will show the real profit to be madethe length of the investment, because long term always means high riskthe level of risk, because the higher it is, the higher the potential loss is

Revolt · Accepted Answer

A: the rate of inflation, which could affect the value of the return; B: the history of the investment, which will indicate the level of risk; C: any taxes that will need to be paid at the state and federal levels; F: the level of risk, because the higher it is, the higher the potential loss is

Question 9

This investment is best considered

Revolt · Accepted Answer

B: high risk with the potential for a high return.

Question 10

Which statement best explains the interest rates related to this CD?

Revolt · Accepted Answer

B: The nominal interest rate is 3 percent, while the real interest rate is 1 percent.

Principles of Investment Answers

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