Answers WINGS PA - 26 Economics SmithInvesting

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When investors purchase a commodity, they believe

the commodity's price will go up after purchase.

the bank will pay interest to the investors.

the investors' employer will match the cost.

the commodity is guaranteed to make them money.

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Which statements apply to a certificate of deposit (CD)? Choose two answers. It is always purchased as a short-term investment.It can be purchased from a banking institution.It is always purchased as a long-term investment.It can be purchased for almost any amount.It is purchased through an individual's employer.

It is always purchased as a short-term investment.

It can be purchased from a banking institution.

It is always purchased as a long-term investment.

It can be purchased for almost any amount.

It is purchased through an individual's employer.

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

mutual fund

401(k)

savings account

What is the relationship between risk and return?

A higher risk often means a higher return.

A lower risk always means a higher return.

A higher risk often means a lower return.

A lower risk will always mean a lower return.

The image shows Alex’s investments in one year. Investments during One Year

He should have invested in a commodity instead of a stock.

He would have lost more with a higher-risk investment.

He most likely would have benefited by diversifying.

He most likely would have profited by buying more of the stock.

The image shows Gale's investments during one year. Investments during One Year

If she had purchased only the stock and had not diversified her investments, she would have lost money.

If she had diversified her investments further, her profits would have been considerably larger.

If she had put money in her savings account only and had not diversified, her profits would grow.

If she had diversified her investments further, she would have reduced her risk but made less of a profit.

The image shows Gale's investments during one year. Investments during One Year

If she had purchased only the stock and had not diversified her investments, she would have lost money.

If she had diversified her investments further, her profits would have been considerably larger.

If she had put money in her savings account only and had not diversified, her profits would grow.

If she had diversified her investments further, she would have reduced her risk but made less of a profit.

What might convince an investor to buy stock or mutual funds?

belief that a company has just reached its peak popularity

news that a stock's price has recently increased significantly

belief that a small number of investors have bought the stock so far

news that a company is about to release a promising product

Which investment has the least liquidity?

mutual fund

house

checking account

small business

The image shows Alex’s investments in one year. Investments during One Year

He should have invested in a commodity instead of a stock.

He would have lost more with a higher-risk investment.

He most likely would have benefited by diversifying.

He most likely would have profited by buying more of the stock.

Which is an example of a high-risk investment?

stock in a start-up company

bond

CDs from an insured bank

401(k)

Which is an example of a high-risk investment?

stock in a start-up company

bond

CDs from an insured bank

401(k)

What might convince an investor to buy stock or mutual funds?

belief that a company has just reached its peak popularity

news that a stock's price has recently increased significantly

belief that a small number of investors have bought the stock so far

news that a company is about to release a promising product

How is a savings account most useful?

for saving for a long time without withdrawing

for depositing and withdrawing money frequently

for using money for CDs and other investments

for using money in the near future but not right away

Which statement best describes stocks?

They should be purchased when prices are high and sold when prices are low.

They are an investment in a company’s progress and profits.

They are a type of investment that includes raw materials and natural resources.

They should be purchased only as long-term investments.

retirementvacationsrainy daysemergencies

retirement

vacations

rainy days

emergencies

What is the definition of risk?

putting money into more than one investment

amount made in profit on an investment

using borrowed funds for an investment

possibility of losing money on an investment

Someone who diversifies investments is more likely to

increase both risks and returns.

offset their losses with gains.

reduce both risks and returns.

increase liquidity of investments.

The pie graph shows sources of income for people ages 65 and over in 2010.

largest source of income.

smallest source of income.

second largest source of income.

fourth largest source of income.

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

mutual fund

401(k)

savings account

When investors purchase a commodity, they believe

the commodity's price will go up after purchase.

the bank will pay interest to the investors.

the investors' employer will match the cost.

the commodity is guaranteed to make them money.

Which statement best describes stocks?

They should be purchased when prices are high and sold when prices are low.

They are an investment in a company’s progress and profits.

They are a type of investment that includes raw materials and natural resources.

They should be purchased only as long-term investments.

It is always purchased as a short-term investment.

It can be purchased from a banking institution.

It is always purchased as a long-term investment.

It can be purchased for almost any amount.

It is purchased through an individual's employer.

The pie graph shows sources of income for people ages 65 and over in 2010.

largest source of income.

smallest source of income.

second largest source of income.

fourth largest source of income.

Someone who diversifies investments is more likely to

increase both risks and returns.

offset their losses with gains.

reduce both risks and returns.

increase liquidity of investments.

Which of these investments may be long term? Choose four answers.savings accountsmutual fundsbondsretirement fundscommodities

savings accounts

mutual funds

bonds

retirement funds

commodities

Which of these investments may be long term? Choose four answers.savings accountsmutual fundsbondsretirement fundscommodities

savings accounts

mutual funds

bonds

retirement funds

commodities

What is the definition of risk?

putting money into more than one investment

amount made in profit on an investment

using borrowed funds for an investment

possibility of losing money on an investment

What is the definition of liquidity?

how difficult it is to maximize returns on investments

how much money someone has in a savings account

how easily an investment can be exchanged for cash

how much income someone has to invest each year

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