PF U8 Diversifying My Future Test

What is the approximate doubling time for an investment earning a 6% annual interest rate, according to the Rule of 72?

• 12 years

• 24 years

• 36 years

• 48 years

What is investing?

• Spending money on goods and services

• Saving money in a bank account

• Using long-term savings to earn a financial return

• Borrowing money for personal use

What is one of the main objectives of the Wall Street Reform Act?

• To reduce the national debt

• To increase corporate profits

• To prevent another financial crisis by increasing regulation of the financial industry

• To eliminate all taxes on financial transactions

What is inflation?

• A decrease in the general level of prices

• A rise in the general level of prices

• A measure of economic growth

• A type of investment risk

How does investing help beat inflation?

• By reducing the cost of goods and services

• By growing faster than the inflation rate

• By keeping money in a savings account

• By avoiding all types of risk

What is an investment portfolio?

• A single investment

• A collection of investments

• A type of savings account

• A financial goal

What is investment risk?

• The chance that an investment’s value will increase

• The chance that an investment’s value will decrease

• The guarantee of a fixed return

• The elimination of financial uncertainty

What is diversification?

• Investing all money in one type of investment

• Spreading risk among many types of investments

• Avoiding all types of investments

• Investing only in high-risk assets

Choose the correct steps for finding the gain in principal profit for return on investment.

• Purchase Price, Profit in Dollars, Gain in value, ROI

• Purchase Price, Value at end of year, Gain in value, Total profit, ROI

• Purchase Price, Profit in Dividends, Sales Price, ROI

• Purchase Price, Sales Price, Profit in Dollars, ROI

What is the first stage of investing?

• Initial investing

• Systematic investing

• Put-and-take account

• Strategic investing