Interest Study Guide

For the financial asset 'Savings Account', list one pro.

• A pro of a savings account is that it is a safe place to store money and earns interest.

• A pro of a savings account is that it has the highest risk among all investments.

• A pro of a savings account is that it usually loses value over time due to high fees.

• A pro of a savings account is that it requires you to invest in stocks.

For the financial asset 'Savings Account', list one con.

• A con of a savings account is that it may have lower interest rates compared to other investments.

• Savings accounts always have the highest returns among all investments.

• Savings accounts are not insured by any government agency.

• Savings accounts require you to invest in the stock market.

For the financial asset 'CD', list one pro.

• A pro of a CD is that it usually offers higher interest rates than regular savings accounts.

• A pro of a CD is that it allows unlimited withdrawals without penalty.

• A pro of a CD is that it has no minimum deposit requirement.

• A pro of a CD is that it provides instant liquidity like cash.

For the financial asset 'CD', describe the risk tolerance required.

• CDs are low risk, suitable for conservative investors.

• CDs are high risk, suitable for aggressive investors.

• CDs are extremely volatile, suitable for day traders.

• CDs are only for those seeking rapid capital gains.

For the financial asset 'Checking Account', provide its definition.

• A checking account is a bank account used for daily transactions such as deposits, withdrawals, and payments.

• A checking account is a type of investment account that earns high interest over time.

• A checking account is a loan provided by the bank for purchasing real estate.

• A checking account is a retirement account used to save for long-term goals.

For the financial asset 'Stocks', provide its definition.

• Stocks represent ownership in a company and a claim on part of its assets and earnings.

• Stocks are a type of loan given to a company by investors, which must be repaid with interest.

• Stocks are government-issued bonds that pay a fixed rate of return over time.

• Stocks are insurance policies that protect against business losses.

For the financial asset 'Stocks', describe the risk tolerance required.

• Stocks require a higher risk tolerance due to market fluctuations.

• Stocks require no risk tolerance as they are always stable.

• Stocks require a low risk tolerance due to guaranteed returns.

• Stocks require a moderate risk tolerance as they rarely fluctuate.

For the financial asset 'Bonds', list one con.

• A con of bonds is that they may offer lower returns compared to stocks.

• Bonds are always riskier than stocks.

• Bonds cannot be traded in financial markets.

• Bonds guarantee high returns regardless of market conditions.

For the financial asset 'Bonds', describe the risk tolerance required.

• Bonds are suitable for moderate to low risk tolerance investors.

• Bonds are suitable for high risk tolerance investors.

• Bonds are only for aggressive investors seeking maximum returns.

• Bonds are suitable for those with no risk tolerance at all.

For the type of debt 'Credit Cards', rank its APR from high to low compared to other types of debt.

• Credit cards generally have the highest APR among common types of debt.

• Credit cards generally have the lowest APR among common types of debt.

• Credit cards generally have a medium APR among common types of debt.

• Credit cards generally have the same APR as mortgages.