INVESTING FINAL 25

Liam is considering when to start saving for his retirement. Why is it beneficial for him to start saving early?

• He will avoid all financial risks in retirement.

• Social Security will cover all his expenses.

• Saving later will result in the same total savings.

• His money has more time to grow through compound interest.

• Inflation does not affect long-term savings.

Aria is considering investing in the stock market. She learns that there is a relationship between risk and return in investing. What is this relationship?

• Higher risk investments have the potential for higher returns.

• Lower risk investments always generate higher returns.

• There is no connection between risk and return.

• High-return investments are always low risk.

• Avoiding all risk guarantees the highest returns.

William is considering investing in mutual funds and is trying to decide between different types. Which type of fund is generally more costly, and why?

• Actively managed funds are more costly because they require professional management.

• Passively managed funds are more costly because they require constant buying and selling.

• Actively managed and passively managed funds have the same costs.

• Passively managed funds are more costly because they charge high management fees.

• Neither type of fund has any costs associated with them.

What is inflation?

• A decrease in the money supply, making goods cheaper
• The stock market growing at a rapid pace
• The overall rise in prices of goods and services over time
• A temporary drop in prices due to a sale or discount
• The government printing more money without any economic impact

Harper and Charlotte are discussing the economic situation in their country. They are trying to identify the CAUSES of inflation. Which of the following factors should they consider? Check all that apply.

• Increase in Demand

• Increase in Money Supply

• A Decrease in Consumer Spending

• Supply Chain Disruptions

• Global Events

As SAVERS & INVESTORS, why should we care about inflation?

• It has no impact on investments or savings
• It guarantees that all investments will grow at a faster rate
• It only affects people who do not invest in the stock market
• It makes all goods and services cheaper over time
• It decreases the value of money, meaning savings may buy less in the future

What can we do with our money now to counter the effects of inflation?

• Keep all money in a savings account earning minimal interest
• Invest in assets like stocks, real estate, or inflation-protected securities
• Stop spending money altogether to avoid inflation's impact
• Withdraw cash and store it at home to keep it safe
• Only invest in assets that never change in value

Rohan is planning his investment strategy and wants to minimize risk. What approach should he take?

• Spreading investments across various types to minimize risk

• Putting all money into one stock to maximize potential gains

• Avoiding investments altogether to prevent losses

• Investing only in the safest, lowest-risk option available

• Selling investments frequently to chase the highest returns

Ethan, who has recently graduated from college, decides to invest all of his savings in buying and selling individual company stocks. What is Ethan's most likely risk tolerance level?

• High

• Average

• Low

• None

• Tisk Tisk Risk

Olivia recently invested in a company and received a payment from the company's profits. What is this payment called?

• The interest earned on a savings account

• A fee investors pay to buy stocks

• A penalty for selling stocks too quickly

• A payment made by a company to its shareholders from its profits

• The total value of all shares a company has issued