Unit 5 Saving & investing

Which situation is a good reason to have a financial reserve that's larger than normal?

• being able to find another job quickly if needed

• having a large montly car payment

• having mostly discretionary expenses

• having an income that is fairly predictable

What is compounding interest?

• interest that is not calculated on a regular basis

• interest that doubles the principal of an account

• interest that is addded to the principal of an account

What is opportunity cost?

• the principal in an investment account

• the value of an investment opportunity a person passes up in order to take another investment opportunity

• the total amount of investments in a portfolio

What is a volatile investment?

• an investment that can change quickly without warning

• an investment that is fairly low risk

• an investment that requires a high volume of investors

Which portion would not be part of an investment portfolio?

• a savings account

• commodities funds

• a savings 529 plan

When is a person's risk tolerance lowest?

• when they are closest to needing the money they invested

• when they are concerned about the diversity of their investment portfolio

• when they are an inexperienced investor  

When is a person's risk tolerance lowest?

• when they are an inexperienced investor  

• when they are concerned about the diversity of their investment portfolio

• when they are closest to needing the money they invested

How does an equity investor make money?

• selling an investment for more than they paid for it 

• depositing money in compounding accounts

• lending money and charging interest

What is a stock?

• a group of real estate investments

• a partial ownership in a company

• a regular payment a company issues investors

Which policy is a way the SEC protects investors?

• • 
    

    requiring companies to disclose financial information

• guaranteeing the value of certain stocks 

• helping investors diversify their portfolios