Test - Saving and Investing for the Future

FDIC insurance protects depositors from loss due to bank failure up to $100,000.

False

An emergency fund should be established before you begin investing for the future.

True

Social security will ensure that you have a financially secure future.

False

Withdrawing money from a CD before its maturity date will result in a penalty

True

Interest rates on money market accounts are typically higher than on regular savings accounts.

True

Real estate is a more liquid investment than is a mutual fund.

False

Investing is the use of savings to earn a financial return.

True

Market timing is a safe and easy investment strategy

False

A bull market is a prolonged period of rising stock prices and general feeling of investor optimism.

True

Municipal bonds are issued by corporations when they need to raise money to pay for expansions, etc.

False

Preferred stockholders do NOT get voting rights

True

You can make unimited contributions to an individual retirement account (IRA)

False

A discount broker is able to offer their clients sound investment advice.

False

Any publicly traded company can offer their stock for sale on the New York Stock Exchange.

False

The ability of an asset to be converted to cash quickly and without loss of value is called

Liquidity

Which of the following is a tax-deferred investment?

Traditional IRA

At what age can you begin withdrawing money from a 401(k) without penalty?

59 1/2

In order to make a higher rate of return, a tradeoff you will likely have to make is

more risk

Investing on a regular and planned basis is called

systematic investing

A rise in the general level of prices is called

inflation

The chance that an investment's value will decrease is

risk

An individual who buys a corporate bond is a/an _____ of that corporation

creditor

An individual who buys stock in a corporation is a/an _____ of that corporation

owner

The ______ the risk and _______ the liquidity, the _______the yield.

HIgher, lower, Higher

The best practice when it comes to investing.

Spread risk among many different investment types

Which of the following is an investment with a high degree of liquidity?

money market account

A natural disaster, a terrorist attack, and a pandemic are all examples of what type of risk?

non-market risk

Which of the following is an investment with a high degree of safety?

Bond

Which of the following is an investment with high expected growth in value?

real estate

An investment with built-in diversification and professional management.

Mutual funds

What is the ROI for an investment bough for $400 and received $38 in dividends for the year?

9.5%

If you own 100 shares of stock at a 60 par value, after a 2:1 split, you would own

200 shares at a $30 par value

Which of the following is an order that an investor can make that gives the broker power to use his/her experience and judgement to make a decision about when to buy or sell a stock.

discretionary order

When buying on margin, your hope is that...

the stock price will increase

What is diversification and how does it minimize risk?

Diversification is having multiple different investment options that have different risks. This minimizes risk because you have multiple options of investments, so if one investment goes down, you have another one to rely on.