Test 2

Question 1

Why should you save?

Answer 1

To provide for future needs (expected and unexpected) and short term goals like vacations, social events and emergencies

Question 2

Long term goals

Answer 2

Home ownership, education, retirement, investment

Question 3

To stay ahead of inflation and make more money

Answer 3

Investment

Question 4

Smaller loans for current students

Answer 4

Education

Question 5

Down payment, the more you put down, the smaller the payments

Answer 5

Home ownership

Question 6

How quickly you turn savings into cash

Answer 6

Liquidity

Question 7

Money should be placed in an institution that offers the best rate of return

Answer 7

Interest earning potential

Question 8

Selecting a savings plan

Answer 8

Liquidity
Safety
Convenience
Interest earning potential

Question 9

The use of your savings to earn a financial return

Answer 9

Personal investing

Question 10

What is the purpose of investing

Answer 10

the overall objective of investing is to earn money with money

Question 11

Reasons for investing

Answer 11

Emergencies
To supplement earned income
Make a profit
Minimize tax burdens
Provide income for retirement
Stay ahead of inflation

Question 12

A rise in the general level of prices

Answer 12

Inflation

Question 13

Criteria for choosing an investment

Answer 13

Safety
High liquidity
High return
Tax benefits
Reasonable purchase price 
Growth in value that exceeds inflation rate

Question 14

Wise investment practices

Answer 14

Define your financial goals
Go slowly (research your investment)
Follow through 
Keep good records 
Seek good investment advice
Keep investment knowledge current

Question 15

Ownership in a corporation

Answer 15

Stock

Question 16

Debt obligation of corporation

Answer 16

Bond

Question 17

Buy a $50 bond and receive $100 at maturity

Answer 17

Government savings bond

Question 18

Buy shares in a large, professionally managed company who invests in many different securities

Answer 18

Mutual funds

Question 19

Investment options

Answer 19

Stocks and bonds
Government savings bond
Mutual funds
Real estate

Question 20

Dividends are fixed, paid first, no voting rights

Answer 20

Preferred stock

Question 21

A class of stock in which the owner of the stock shares directly in the success or failure of a business

Answer 21

Common

Question 22

The part of the profits of a corporation that each shareholder receives

Answer 22

Dividends

Question 23

Stocks that have consistent histories of paying high dividends

Answer 23

Income stocks

Question 24

Shares of stock in companies that reinvest their profits into the business so that it can grow and expand

Answer 24

Growth

Question 25

A stock that sells for less than $5 a share (highly speculative)

Answer 25

Penny

Question 26

Stocks of large well established, and usually profitable businesses

Answer 26

Blue chip

Question 27

Stocks that remain stable and pay dividends during an economic decline

Answer 27

Defensive

Question 28

Stocks that do well when the economy is stable or growing

Answer 28

Cyclical

Question 29

Rising stock prices and a general feelings of optimism

Answer 29

Bull market

Question 30

Investors are pessimistic about the overall economy and start to sell

Answer 30

Bear market

Question 31

Example of a defensive stock

Answer 31

Utilities, drugs, food

Question 32

Example of a cyclical stock

Answer 32

Travel industries

Question 33

Stock investing strategies

Answer 33

Conservative Aggressive Speculative

Question 34

Take limited risks, concentrate on liquidity

Answer 34

Conservative

Question 35

Take risks, concentrate on growth stocks

Answer 35

Aggressive

Question 36

High probability of a loss but also a chance for large gains

Answer 36

Speculative

Question 37

Perks of mutual funds

Answer 37

Diversification, professional management, small initial investments

Question 38

Perks of real estate

Answer 38

Long term stability and growth in value but can be difficult to sell

Question 39

What is the most illiquid of all investments

Answer 39

Real estate

Question 40

Invests in the common stock of smaller companies that have a greater potential to grow

Answer 40

Growth funds

Question 41

Invests in the common stock of established companies and industries

Answer 41

Income funds

Question 42

Invests in a mixture of stocks

Answer 42

Balanced funds

Question 43

Purchases international stocks and bonds as well as US securities

Answer 43

Global funds

Question 44

Holds stocks that react the same as the stock markets as a whole do

Answer 44

Index funds

Question 45

A special retirement account where you pay taxes on money going into your account and then all future withdrawals are tax free

Answer 45

Roth IRA

Question 46

Types of real estate

Answer 46

Vacant land Single family homes Duplex and apartments Recreation and retirement property