Unit Test — Unit test Answers

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1
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Why do some lenders require borrowers to secure credit?

A
to prevent defaults
B
to guarantee full repayment
C
to avoid any losses
D
to reduce risk
2
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one yeartwo yearsthree yearsfour years

A
one year
B
two years
C
three years
D
four years
3

Which statement best describes a college education?

A
An employer typically pays for it in order to educate an employee.
B
The student pays for it, and it is required in many professions.
C
It usually takes two years to complete and tends to focus on technical training.
D
It lasts a short period of time—only a few months, or even weeks.
4

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.
5

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

A
liquidity.
B
sunken cost.
C
diversification.
D
compound interest.
6

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.
7

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.
9

Interest paid on a loan is calculated as a percentage of the

A
principal.
B
amount owed.
C
compounded principal.
D
collateral.
10

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.
11

Which statement about tuition is the most accurate?

A
Four-year universities have the lowest tuition.
B
Community colleges tend to be more expensive.
C
Public colleges are cheaper for in-state residents.
D
Tuition is higher for public colleges than private ones.
12

salarytuitionhourly payemployee benefits

A
salary
B
tuition
C
hourly pay
D
employee benefits
13

Which is an example of a short-term investment?

A
bonds
B
retirement funds
C
savings accounts
D
houses
14

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?
16

Government regulations on credit aim to

A
ensure lenders are repaid.
B
help borrowers pay on time.
C
support those borrowing credit.
D
educate lenders about consumers.
17

What is one benefit of purchasing saving bonds?

A
Saving bonds are purchased from the government and guaranteed to increase in value.
B
Saving bonds are purchased from commercial banks and guaranteed to increase in value.
C
Saving bonds are short term investments backed by the government to protect from loss.
D
Saving bonds are long term investments created to help first time home buyers obtain a mortgage.
18

Which investor is making a common error?

A
an employee of a popular hardware store who invests only in that company’s stock
B
an employee of a popular software company who invests in many similar companies
C
someone who sells the slumping stock while they are still able to make a profit based on what they paid
D
someone who buys stock in both domestic and more risky international companies
19

When a person invests income, he or she

A
spends no money in the short term and saves it all for the long term.
B
uses money in a way that will increase its value in the future.
C
spends income only on essential needs such as housing.
D
cuts out all discretionary spending for a set period to save money.

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