AnswersWA-Financial EducationUnit Test

Saving and Investing Answers

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1
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Look at the following investment options.

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A
Bank 1
B
ABC Manufacturing Company
C
US Treasury
D
XYZ Video Game Company
2
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What is the purpose of a US government bond?

A
It can be used in transactions for large purchases.
B
It allows an investor to place money in mutual funds.
C
It provides a loan from an investor to the federal government.
D
It gives everyone a chance to borrow money from the federal government.
3

Which goal is most likely to be met with a certificate of deposit?

A
saving enough for retirement
B
making a large profit on the investment
C
keeping money safe while earning some interest
D
reducing amount of taxable income
4

What is meant by the term "diversifying stocks”?

A
profiting from investing in stocks
B
taking risks in the stock market
C
owning shares of a variety of stocks
D
purchasing stock from one industry
5

Jade invests $3,000 in her retirement account her first year of work. After a year, she sees there is $3,180 in the account. What was the rate of return on the investment?

A
0%
B
6%
C
100%
D
180%
6

Nicolau has just started working and wants to wait 10 years to start investing in a retirement account.Why should he consider starting right away?

A
He will have to go through a long application process.
B
He will have to wait longer to withdraw the money at retirement.
C
He will accumulate more money due to interest.
D
He will be able to use the money for short-term goals if needed.
7

What does rate of return refer to?

A
how long money stays invested
B
how risky it is to invest money in a fund
C
the rate it will take to pay back an investment
D
how fast an investor will make back invested money
8

Estrella decides to buy 2 shares of stock in her favorite game company.How does that change the relationship between Estrella and the company?

A
She owes money to the company.
B
She will receive an income from the company.
C
She owns a small part of the company.
D
She is considered an employee of the company.
9

What is an example of a short-term investment?

A
college savings account
B
retirement account
C
mutual fund account
D
money market account
10

A group of friends pool their money to make an investment. Vita argues that she has previously earned a return of 7% on the stock market.What argument might Azhar give for investing in a CD with a 3% return instead?

A
There is a good chance that the stock market investment will lose money.
B
Keeping money in the CD will result in a 7% return in the long run.
C
Investing in the CD is good for the economy because it helps the government.
D
The CD could result in more money because it carries a higher risk.

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