AnswersEA Academy Civics 9Saving and Investing

Saving and Investing Answers

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1
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Why might a beginning investor choose to invest in a mutual fund rather than play the stock market?

A
Mutual funds have total liquidity, while stocks do not.
B
A money manager will take charge of investing people’s money in a mutual fund.
C
Mutual funds do not have minimum costs for entry, while the stock market does.
D
A mutual fund makes it easier to invest money with companies the investor agrees with.
2
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What is an example of a short-term investment?

A
college savings account
B
retirement account
C
mutual fund account
D
money market account
3

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.
4

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.
5

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.
6

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.
7

Look at the following investment options.

Question illustration
A
Bank 1
B
ABC Manufacturing Company
C
US Treasury
D
XYZ Video Game Company
8

What makes CDs and money market accounts low-risk investments?

A
They have a high interest rate.
B
They are insured by the government.
C
They carry the promise of high profits.
D
They are loans to the federal government.
9

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
10

Ena learns that her parents have been contributing to a college savings account since she was a baby.What is one advantage of keeping money in the college account instead of in a regular savings account?

A
Her parents do not have to pay taxes on deposits to the college savings account.
B
Interest rates are usually lower for college savings accounts.
C
The money will not be as well protected in a regular savings account.
D
The money in the college savings account can be used for any expenses.

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