Economics Investing Test Module 9
| 1. | 1. ________ are typically comprised of a mix of ________ and ________. | c. Mutual funds; stocks; bonds | |
| 2. | 2. If an investment is considered “volatile”, it means… | b. the value of the investment may be hard to predict. | |
| 3. | 3. Why might a town decide to issue bonds? | b. To build new roads or bridges. | |
| 4. | 4. Diversification is important in investing because… | a. It helps you to balance your risk across different types of investments. | |
| 5. | 5. Why is a high-quality bond typically considered a lower-risk investment than a stock? | a. A bond typically pays a fixed, predictable amount of interest each year. | |
| 6. | 6. Which of the following would be considered the highest risk portfolio? | c. A portfolio made up of 60% stocks, 30% mutual funds, and 10% Treasury bonds. | |
| 7. | 7. Which investment type typically carries the least risk? | c. Savings Accounts | |
| 8. | 8. Which of the following is generally true about 401(k) and 403(b) retirement plans? | d. All of the above | |
| 9. | 9. When might be the best time to start saving for retirement? | c. At the earliest possible date. | |
| 10. | 10. How can investors receive compounding returns? | b. By investing their earnings back into their original investment | |
| 11. | 11. What are dividends? | c. A distribution of a small percentage of profits to shareholders. | |
| 12. | 12. When you buy a ____ , you are loaning money to an organization. | b. Bond | |
| 13. | 13. What happens when a bond becomes due? | b. The issuer will pay you back, plus interest. | |
| 14. | 14. Which best describes the difference between stocks and bonds? | b. Stocks allow investors to own a portion of the company; bonds are loans to the company. |
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| 15. | 15. Generally speaking, the _______ the risk, the _______ the potential return or loss. | b. higher; higher | |
| 16. | 16. What is the primary reason to issue stock? | b. To raise money to grow the company |
| 17. | 17. Which type of portfolio might a young investor who is not afraid of risk choose? | a. A portfolio of with a high percentage of stocks. | |
| 18. | 18. When it comes to investing, what is the typical relationship between risk and return? | b. The greater the potential risk, the greater the potential return. | |
| 19. | 19. If an employer does not offer a retirement plan, what might be another way to save for retirement? | d. Both A and B | |
| 20. | 20. Which of the following correctly orders the investments from LOWER risk to HIGHER risk? |
c. Treasury bond − Diversified mutual fund – Stock |
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