AnswersJPS-202526-Arvada West-CO-Economics and Financial Literacy semester-CR-CATSParriottUnit Test

Unit Test — Cumulative exam Answers

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1
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Putting money into more than one kind of investment at a time is called

A
liquidity.
B
sunken cost.
C
diversification.
D
compound interest.
2
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How does time generally affect the risk of an investment?

A
Short-term investments are generally less risky than long-term investments.
B
Long-term investments are generally more risky than short-term investments.
C
Time has no effect on the risk of an investment.
D
Short-term investments are generally more risky than long-term investments.
3

Changes in monetary policy occur when the Federal Reserve

A
adjusts business laws to affect the money supply.
B
changes taxation levels to affect the economy.
C
changes spending levels to affect the economy.
D
adjusts interest rates to affect the money supply.
4

Julie wants to buy a car and is deciding how she should invest her money. To best meet her needs, she should

A
keep her money in a checking account for easy access.
B
invest in US savings bonds because of its short term.
C
invest in a commodity because of its low risk.
D
keep her money in a savings account for easy access.
5

When discussing a loan, interest rates are expressed as a percentage of the

A
investment fees.
B
the principal.
C
the profit.
D
taxes owed.
6

Which is an example of a short-term investment?

A
bonds
B
retirement funds
C
savings accounts
D
houses
7

Which questions should Robert ask himself before investing the $10,000 he inherited? Select four options.How am I protected as an investor? Are my friends investing in a similar way? What guarantees are in place so I make money? What taxes will I have to pay on this investment?How do the risks compare to the potential gains? What are the chances that the investment will fail?

A
How am I protected as an investor?
B
Are my friends investing in a similar way?
C
What guarantees are in place so I make money?
D
What taxes will I have to pay on this investment?
E
How do the risks compare to the potential gains?
F
What are the chances that the investment will fail?
8

Which of these affect real investment value? Check all that apply.fees and expensesinflationnominal interest ratepretax returnstaxes

A
fees and expenses
B
inflation
C
nominal interest rate
D
pretax returns
E
taxes
9

Which statement best describes how inflation affects the value of investments over time?

A
It erases the value of investments.
B
It increases the value of money.
C
It decreases the value of money.
D
It controls the value of investments.
10

Interest rates generally reflect

A
the potential effects of inflation.
B
the level of risk in an investment.
C
the real value of the investment.
D
the amount of money invested.
11

In what circumstance would a property insurance claim be rejected?

A
The insurance company finds that a homeowner intentionally caused damage.
B
The property damage is caused by a natural disaster, such as a flood.
C
The insurance company changes its policies after property damage occurs.
D
The property damage is extensive and requires lengthy and expensive repairs.
12

Which is always a cost when buying insurance?

A
premium
B
deductible
C
co-payment
D
payout
13

Bryan receives an e-mail from a group posing as a police officers association and asking for bank account information. This is an example of

A
social engineering.
B
phishing.
C
counterfeiting.
D
forgery.
14

What is the compound interest on a three-year, $100.00 loan at a 10 percent annual interest rate?

A
$10.00
B
$21.00
C
$33.10
D
$46.41
15

The type of credit people are most likely to use for small purchases during their lifetime is

A
a credit card.
B
a personal loan.
C
an auto loan.
D
a mortgage.
16

A way to build good credit is

A
using only secured loans.
B
taking out many lines of credit.
C
paying bills when they are due.
D
using only credit cards.
17

The graphic shows a sample 401k investment.

Question illustration
A
It encourages employees to contribute by offering an employer bonus.
B
It ensures that employees who contribute will retire with more money.
C
It guarantees employees a return on their investment because of a company match.
D
It incentivizes employees to contribute by offering an employer match.
18

When an insurance company needs to provide a payout, the money is removed from

A
the consumer’s income.
B
a bank loan.
C
a pool of funds.
D
the consumer’s account.
19

Checking a credit report is a good way to

A
know whether credit is improving.
B
reduce the amount of money owed.
C
determine which debts to pay off.
D
decrease interest payments.

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