Investing — Unit test Answers

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21
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What is the definition of risk?

A
putting money into more than one investment
B
amount made in profit on an investment
C
using borrowed funds for an investment
D
possibility of losing money on an investment
22
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Someone who diversifies investments is more likely to

A
increase both risks and returns.
B
offset their losses with gains.
C
reduce both risks and returns.
D
increase liquidity of investments.
23

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

A
mutual fund
B
CD
C
401(k)
D
savings account
24

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.
25

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.
26

The pie graph shows sources of income for people ages 65 and over in 2010.

Question illustration
A
largest source of income.
B
smallest source of income.
C
second largest source of income.
D
fourth largest source of income.
27

Which of these investments may be long term? Choose four answers.savings accountsmutual fundsbondsretirement fundscommodities

A
savings accounts
B
mutual funds
C
bonds
D
retirement funds
E
commodities
28

What is the definition of risk?

A
putting money into more than one investment
B
amount made in profit on an investment
C
using borrowed funds for an investment
D
possibility of losing money on an investment
29

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

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