Answers26-27 Ignite Economics-KY-EconomicsInvesting and Financial Markets

Investing and Financial Markets — Unit test Answers

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1
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In which situation would a certificate of deposit (CD) be the best banking choice?

A
Samuel is setting money aside but still needs emergency access to it.
B
Hafsa wants a guaranteed return, and won’t need the money for several years.
C
Darren is looking for an investment that has a very high interest rate.
D
Raj is looking for an investment with a fast return so he can reinvest.
2
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What can be traded in a commodities market?

A
stock
B
bonds
C
oil
D
debt
3

Which are common types of bonds that are currently issued? Check all that apply.

A
corporate bonds
B
equity bonds
C
municipal bonds
D
Treasury bills
E
Treasury notes
F
war bonds
4

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
5

What is an advantage of renting a place to live?

A
lower up-front costs
B
payments change from month to month
C
low down payment
D
increasing equity over time
6

Look at the table below showing an example of a checkbook ledger.

Question illustration
A
$624.50
B
$704.50
C
$755.50
D
$784.50
7

Since stocks can be traded online, which purpose is best served by markets?

A
Markets regulate transactions.
B
Markets are where the trades actually occur.
C
Markets sell the assets to be traded.
D
Markets ensure that the transactions are secure.
8

best

T
They both use taxes to support a country’s growth.
T
They both invest money to earn a profit.
T
They both receive capital to use for growth.
T
They both act as angel investors for start-ups.
9

Which of these is the best reason for Nina to monitor her bank account statements online or on her cell phone app?

A
to know when her bills are due
B
to determine the exact date she can retire
C
to ensure she's paying her fair share in taxes
D
to know how much money she has for budgeting
10

In what way does a 401(k) differ from an individual retirement account (IRA)?

A
A 401(k) is created through an individual’s employer.
B
A 401(k) can be created by individuals who deposit money.
C
A 401(k) allows consumers to contribute before taxes.
D
A 401(k) is a good long-term investment strategy.
11

Which is an example of a high-risk investment?

A
stock in a start-up company
B
bond
C
CDs from an insured bank
D
401(k)
12

How is a savings account most useful?

A
for saving for a long time without withdrawing
B
for depositing and withdrawing money frequently
C
for using money for CDs and other investments
D
for using money in the near future but not right away
13

Buying a new car can create a financial challenge because

A
car insurance rates will decrease over time.
B
car payments must become part of the budget.
C
car insurance rates will be higher than renter’s insurance.
D
car payments are likely to exceed available income.
14

Which best describes what generally occurs in financial markets?

A
Debt and loans are traded.
B
Assets are traded.
C
Commodities are traded.
D
Shares are traded.
15

If a company pays dividends on a stock, does that mean that the stock has appreciated in value? Why or why not?

Y
Yes, the payment of dividends indicates that a stock’s value has increased.
N
No, the payment of dividends indicates that a company has earned profits.
Y
Yes, the payment of dividends indicates that a company’s assets have grown.
N
No, the payment of dividends indicates that a company can repay investors.
16

Sara is 16 years old and would like to open a bank account. What will she need in addition to her parent or guardian? Select four answers.

A
government-issued ID or birth certificate
B
high school diploma
C
money to start the account
D
social security number or immigration form
E
proof of address
17

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

A
mutual fund
B
CD
C
401(k)
D
savings account
18

Mr. and Mrs. Atoll are planning a party for 10 people and want to make sure they have enough soda for everyone to have two bottles. Which of the following makes the most economic sense?

A
20 bottles of soda at $1.50 each
B
4 six-packs of soda at $5.00 each
C
one case of 24 sodas at $18.50
D
two cases of 24 sodas at $18.50 each
19

When making a decision about housing, the first step should be

A
visiting different housing locations.
B
gathering information on available housing.
C
analyzing the availability of housing loans.
D
comparing the cost of housing alternatives.
20

Which best describes the role that government and business play in investments?

A
They both use taxes to support a country’s growth.
B
They both invest money to earn a profit.
C
They both receive capital to use for growth.
D
They both act as angel investors for start-ups.

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