AnswersISP ONLY Economics S5000XXInvesting and Financial Markets

Investing and Financial Markets — Unit test Answers

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61
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Are the buying and selling of stocks centralized activities? Why or why not?

A
Yes, the New York Stock Exchange is the primary exchange for all the world’s most important trades.
B
No, people can buy stocks anywhere, and they do not need to go through a market.
C
Yes, the world’s stock markets are coordinated exchanges, and they are dependent on one another.
D
No, there are many stock markets around the world, and they are independent of one another.
62
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A monthly fixed rate mortgage payment

A
could change.
B
never changes.
C
increases annually.
D
decreases annually.
63

Which of these is a characteristic of certificates of deposit (CDs)?

A
They are always offered at variable rates.
B
They last for a set period of time.
C
They can be opened with any amount of money.
D
They allow access to the money at any time without penalty.
64

Which of these is an advantage of checking accounts?

A
Checking accounts prevent the customer from having overdraft fees.
B
Checking accounts allow convenient ways to deposit or withdraw funds.
C
Checking accounts are processed immediately so customer and bank records always match.
D
Checking accounts offer limited checks but offer higher rates of interest.
65

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.
66

What is the major difference between a nationwide bank and a community bank?

A
The community bank offers more services.
B
The nationwide bank services only local customers.
C
The nationwide bank has fewer branches.
D
The community bank services only local customers.
67

Which term refers to the possibility of an investor losing some or all of an investment?

r
risk
l
likelihood
p
probability
c
chance
68

In which situation would a savings bond be the best investment to earn interest?

A
if you need access to your cash quickly
B
if you are saving each month for a new car
C
if you are putting aside a chunk of money to purchase a house in five years
D
saving to pay a tax bill in four months
69

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

Question illustration
A
$761.25
B
$810.30
C
$814.75
D
$1,186.25
70

Read the scenario.Raoul has just been promoted to a supervisor’s position, which is a steady job. He likes to enjoy life, take vacations, and change things up every now and then. That’s why he will not have a lot of extra money to spend on repairs and maintenance on his car.

A
buy a used car.
B
lease a used car.
C
buy a new car.
D
lease a new car.
71

Which term refers to the possibility of an investor losing some or all of an investment?

A
risk
B
likelihood
C
probability
D
chance
72

The chart compares transportation options.

Question illustration
A
the up-front cost
B
the monthly payments
C
the length of payments
D
the cost of insurance and gas
73

Once stocks are on the market, which best explains how their prices are set?

A
Prices are controlled by the issuing company.
B
Prices are set by the financial market.
C
Prices follow economic trends.
D
Prices fluctuate on the basis of demand.
74

When companies spend millions of dollars developing logos and slogans, or use celebrity endorsements to encourage consumers to buy particular products, this is called

A
false advertising.
B
undue influence.
C
product branding.
D
quality assurance.
75

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.
76

At what point does buying in bulk stop being a wise spending choice?

A
when the consumer has a lot of space to store bulk items
B
when costs rise too quickly due to demand
C
when bulk items are not on sale anymore
D
when the consumer buys more than is needed
77

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.
78

Are the buying and selling of stocks centralized activities? Why or why not?

A
Yes, the New York Stock Exchange is the primary exchange for all the world’s most important trades.
B
No, people can buy stocks anywhere, and they do not need to go through a market.
C
Yes, the world’s stock markets are coordinated exchanges, and they are dependent on one another.
D
No, there are many stock markets around the world, and they are independent of one another.
79

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.
80

A monthly fixed rate mortgage payment

A
could change.
B
never changes.
C
increases annually.
D
decreases annually.

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