Money Matter Unit 3 Investing

All of the following are reasons to invest, EXCEPT…

• To earn a consistent rate of return with lower risk than typical savings accounts

• To minimize the impact on inflation, which causes you to lose purchasing power

• To earn higher average rates of return than you would in a typical savings account

Which of the following statements BEST describes investing?

• Buying and selling stocks within the same day to take advantage of short-term price variation

• Reducing the purchasing power of your money over time

• Buying assets, like stocks, with the intention to hold them and grow your wealth over the long term.

An investor can best harness the power of compounding by doing all of the following, EXCEPT…

• Starting to invest early

• Making frequent trades

• Reinvesting earnings

Which of the following statements BEST describes the stock market?

• Investors buying stock in hopes of being hired by companies

• Businesses selling partial ownership of their companies to raise capital

• People making donations to companies that need funding

During a BULL market…

• Investors are pessimistic about how the stock market will perform

• The unemployment rate in the country increases

• More investors are buying stocks, which causes stock values to increase

Over time, the stock market has…

• Experienced highs and lows but increased in overall value

• Rarely experienced changes and has maintained the exact same value

• Gone through severe ups and downs with an overall decrease in value

What is a stock?

• A measurement of a company’s profits

• An investment option that allows you to own a small piece of a company

• An annual report that includes details about a company’s leadership and earnings

When reading a stock quote, which of the following metrics would give you the best idea of the total value of the company?  

• The market cap

• The stock’s opening and closing price for that day

• The stock ticker symbol

Which of the following is TRUE about a stock split?

• Stock splits decrease the number of shares you own

• Stock splits indicate that a company is doing poorly

• Stock splits make a stock more accessible to a greater number of investors

Which of the following most accurately describes what a bond is?

• A bond is an investment in which an investor lends money to a corporation or government with the expectation that it will be paid back with interest

• A bond is a government loan made to a corporation with the expectation that it will be paid back with interest

• A bond is a government loan made to an individual investor with the expectation that it will be paid back with interest