19 - 1 Saving and Investment Planning Quiz

What is one of the basic goals of saving and investment planning?

• To spend all your income

• To explain the basics of saving and investing

• To avoid any financial planning

• To ignore investment opportunities

Which of the following is a factor to consider when evaluating savings and investment alternatives?

• The color of the investment brochure

• The factors affecting savings and investment alternatives

• The popularity of the investment

• The location of the bank

What should you identify as part of saving and investment planning?

• Types of savings and investments

• Types of shopping malls

• Types of entertainment options

• Types of vacation spots

What is the primary benefit of investing and using savings for the economy?

• It decreases the demand for goods and services.

• It leads to more borrowing from financial institutions.

• It increases demand for goods and services, creating more jobs.

• It reduces spending by workers.

What is the main difference between saving and investing?

• Saving is for immediate spending, while investing is for future use.

• Saving is storing money for future use, while investing is using money to earn more.

• Saving involves taking loans, while investing involves giving loans.

• Saving is riskier than investing.

Which of the following is an investment goal for people who want income for current living expenses?

• Long-term growth

• Current income

• Wealth accumulation

• Future security

How do savings that are invested and used benefit the economy?

• By reducing the need for financial institutions.

• By decreasing the demand for goods and services.

• By increasing borrowing and spending, leading to more jobs.

• By limiting personal needs like college and homes.

What is compound interest?

• Interest calculated on the initial principal only

• Interest calculated on the amount saved plus the interest previously earned

• Interest that decreases over time

• Interest that is paid only once a year

How does the frequency of compounding affect savings growth?

• Less frequent compounding results in greater growth

• More frequent compounding results in greater growth

• Frequency of compounding has no effect on growth

• Compounding frequency only affects the principal amount

What does the Time Value of Money (TVM) concept suggest?

• Money today is worth less than money in the future

• Money today will be worth more in the future because of the potential to earn interest

• Money in the future is worth the same as money today

• Money today cannot earn interest