Financial Literacy: Investing

May 7, 2016 | Author: Ross Green | Category: N/A
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S T U D E N T

Financial Literacy: Investing The Basics of Investing Directions: Answer the following questions.

A S S E S S M E N T

1. Which of the following is NOT one of the three main investment categories? A. Stocks B. Mutual Funds C. Bonds D. Cash 2. The total of all of your assets including stocks, bonds, cash, real estate and other types of investments you may own is which of the following? A. Portfolio B. Trades C. Bull Market D. Bear Market

I A N S W E R

3. Buying or selling of stocks and bonds in the capital market is known as which of the following? A. Portfolio B. Trades C. Bull Market D. Bear Market

K E Y

4. An overall increase in value of the capital market is known as which of the following? A. Portfolio B. Trades C. Bull Market D. Bear Market 5. An overall decrease in value of the capital market is known as which of the following? A. Portfolio B. Trades C. Bull Market D. Bear Market

Accompanies: Financial Literacy: Investing 1

S T U D E N T

Financial Literacy: Investing 6. Buying stocks or bonds in individual companies, such as buying stock in Dell or Yahoo!, is which of the following? A. Individual Investments B. Mutual Funds C. Employer-Sponsored Plans D. Individual Retirement Plans

A S S E S S M E N T

7. Buying into a large group of stocks or bonds instead of in individual companies is which of the following? A. Individual Investments B. Mutual Funds C. Employer-Sponsored Plans D. Individual Retirement Plans

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8. Investing a percentage of your paycheck each month into your company’s retirement plan is which of the following? A. Individual Investments B. Mutual Funds C. Employer-Sponsored Plans D. Individual Retirement Plans

A N S W E R K E Y

9. Investing in a retirement plan designed specifically for individuals to use in place of or in addition to a company retirement plan is which of the following? A. Individual Investments B. Mutual Funds C. Employer-Sponsored Plans D. Individual Retirement Plans 10. Which of the following is NOT a type of investment account which best describes when you paid or will be expected to pay taxes on the money you put into the account? A. Taxable Account B. Income Tax Account C. Tax-Deferred Account D. Tax-Exempt Account

Accompanies: Financial Literacy: Investing 2

S T U D E N T

Financial Literacy: Investing Risk and Reward Directions: Answer the following questions.

A S S E S S M E N T

1. Margaret, who is 60 years old, is changing her investment portfolio to one with less risk than she has had in the past. She is putting most of her money in cash investments such as money market funds and certificates of deposit. Which of the following best describes this scenario? A. Low Risk B. Limited Risk C. Moderate Risk D. High Risk

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2. Janet enjoys making investments which pay her money every so often in the form of interest or dividend payments so she invests her money in blue-chip companies and highly rated government bonds. Which of the following best describes this scenario? A. Low Risk B. Limited Risk C. Moderate Risk D. High Risk

A N S W E R K E Y

3. Trevor likes to identify small companies with new products which appear to have an appeal of a large base of potential customers. Once he identifies these companies, he likes to invest his money in them before the new products have had much time on the market. Which of the following best describes this scenario? A. Low Risk B. Limited Risk C. Moderate Risk D. High Risk

Accompanies: Financial Literacy: Investing 1

S T U D E N T

Financial Literacy: Investing 4. Scott is in his 20s and never took time to learn much about investing before he started earning his own money. He wants to get rich as quickly as possible and is willing to take some risks to achieve his goal. Which of the following best describes this scenario? A. Low Risk B. Limited Risk C. Moderate Risk D. High Risk

A S S E S S M E N T

5. Antonio is in his mid-20s and just starting out in his career with a company which offers a retirement plan. Which of the following is NOT the best investment choice for him over the next 20 years or so? A. Speculative, high-risk investments B. His company’s retirement plan C. Monthly investments in a balanced mutual fund D. Cash investments

II A N S W E R K E Y

Accompanies: Financial Literacy: Investing 2

S T U D E N T

Financial Literacy: Investing Calculating Your Return Directions: Answer the following questions.

A S S E S S M E N T

1. If you buy 200 shares of a company’s stock which pays $1.50 per share in dividends each year, how much money will you earn in the first year in dividends only? A. $150 B. $200 C. $300 D. $450 2. If you buy 200 shares of a company’s stock (they do not pay a dividend) at $5 per share, and then sell those 200 shares for $7 per share, how much money will you have earned in growth on this stock? A. You will earn $200 B. You will earn $400 C. You will lose $400 D. You will lose $200

III A N S W E R

3. If you buy 200 shares of a company’s stock (they do not pay a dividend) at $7 per share, and then sell those 200 shares for $4 per share, how much money will you have earned in growth on this stock? A. You will lose $600 B. You will earn $600 C. You will earn $300 D. You will lose $1000

K E Y

4. If you invest $1000 in a money market which pays you an Annual Percentage Rate of three percent interest, how much money will you earn in the first month? (Reminder: The Annual Percentage Rate is divided by how many payments per year you will be receiving.) A. $30 B. $2.50 C. $3.00 D. $300

Accompanies: Financial Literacy: Investing 1

S T U D E N T

Financial Literacy: Investing 5. If you purchase a bond with a face value of $1000 at a 10 percent discount, how much will you pay for the bond? A. $1100 B. $1000 C. $900 D. $990

A S S E S S M E N T III A N S W E R K E Y

Accompanies: Financial Literacy: Investing 2

S T U D E N T

Financial Literacy: Investing The Basics of Stocks Directions: Answer the following questions.

A S S E S S M E N T

1. Which of the stock types listed below best describes a company which pays dividends to its stockholders? A. Growth Stock Companies B. Income Stock Companies C. Potential Stock Companies D. Future Stock Companies 2. Which of the stock types listed below best describes a company which may or may not pay a dividend to its stockholders but does have the potential to increase its overall value? A. Growth Stock Companies B. Income Stock Companies C. Potential Stock Companies D. Future Stock Companies

IV A N S W E R

3. What is the average price per share which indicates shares traded below this price are “penny stocks” and shares traded above this price are “blue chip” stocks? A. $1 B. $5 C. $100 D. $50

K E Y

4. If an investor wants to protect himself with investments which do well when the economy is doing poorly, in which of these two types of stocks should he invest? A. Cyclical B. Defensive C. Possessive D. Income

Accompanies: Financial Literacy: Investing 1

S T U D E N T

Financial Literacy: Investing 5. Which of the following is another type of stock that can also be considered an income stock? A. Common B. Preferred C. Penny D. Quarter

A S S E S S M E N T

6. If an investor wants a stock which will follow what trends of the economy, in which of these types of stocks should he invest? A. Cyclical B. Defensive C. Common D. Preferred

IV

7. Which of the following types of stock are considered to be a higher risk than a blue chip stock? A. Defensive B. Penny C. Cynical D. Preferred

A N S W E R K E Y

8. Which of the following is another type of stock which can also be considered a growth stock? A. Common B. Preferred C. Penny D. Defensive 9. When a company first sells its stock to the public investors, this is known as what type of market? A. Secondary Market B. Bull Market C. Primary Market D. Bear Market

Accompanies: Financial Literacy: Investing 2

S T U D E N T

Financial Literacy: Investing 10. An investor owns 500 shares of XYZ stock which is valued at $100 per share. The company does a 4:1 split which now gives the investor 2000 shares of the XYZ stock. How much will the price likely be per share when this stock split occurs? A. $400 B. $100 C. $25 D. $50

A S S E S S M E N T IV A N S W E R K E Y

Accompanies: Financial Literacy: Investing 3

S T U D E N T

Financial Literacy: Investing The Basics of Bonds Directions: Answer the following questions.

A S S E S S M E N T

1. A bond represents which of the following for the investor? A. Ownership in the company B. Debt of the company owed to the investor C. Generalist company man D. Fixed Return 2. Which of the following is a corporate bond which is simply secured or “backed” by the general credit of the corporation? A. Debenture Bond B. Asset-Backed Bond C. General Review Bond D. Fixed Bond

V A N S W E R

3. Which of the following is a corporate bond which is secured or “backed” by some or all of the assets of the corporation? A. Debenture Bond B. Asset-Backed Bond C. General Revenue Bond D. Ownership Bond

K E Y

4. A municipal bond which is issued by a government entity similar to a corporation’s debenture bond is which of the following? A. General Obligation Bond B. Revenue Bond C. Neither type applies D. Ownership Bond 5. Municipal bonds can be used by different levels of government to do which of the following? A. Highway Projects B. Tree System Projects C. Hire a new basketball coach D. Investor Projects

Accompanies: Financial Literacy: Investing 1

S T U D E N T

Financial Literacy: Investing 6. A “T-Bill” refers to a U.S. Treasury bond which is considered as which of the following? A. Low-risk cash investment B. High-risk cash investment C. Current cash investment D. Discount cash investment

A S S E S S M E N T

7. An Agency Bond is a bond related to which of the following? A. Government B. Bank C. Company D. Individuals 8. Which of the following is NOT a basic way to make money with bonds? A. Growth B. Interest C. Discount Rates D. Investment

V A N S W E R

9. If you buy a $10,000 bond which pays eight percent interest once a year and you hold the bond for one year, how much will you earn in interest? A. $80 B. $800 C. $66.66 D. $8.00

K E Y

10. If you buy a discounted bond with a face value of $10,000 at a discount rate of five percent, how much will you pay for the bond when you buy it? A. $500 B. $10,500 C. $9,500 D. $5000

Accompanies: Financial Literacy: Investing 2

S T U D E N T

Financial Literacy: Investing The Basics of Mutual Funds Directions: Answer the following questions.

F I N A L

1. Which type of investment carries the lowest risk for an average individual investor? A. Individual Growth Stocks B. Agency Bonds C. Balanced Mutual Funds D. Speculative Mutual Funds

A S S E S S M E N T

2. The fund has had a consistent return for the last three to five years. This statement describes which of the following? A. Performance B. Risks C. Costs D. Balanced

A N S W E R

3. ____________ is known as a commission of one percent, paid each time the investor deposits new money into the mutual fund. Which of the following terms best fits this definition? A. No Load B. Front End Load C. Back End Load D. Administrative Fees

K E Y

4. The risk level of a mutual fund is dependent on which of the following? A. Administrative fees within the fund B. Stocks and bonds held within the fund C. Individual growth D. Stock market 5. Alice deposits $100 into her mutual fund account every month, buying as many shares as this amount will cover. Which of the following terms best fits this scenario? A. Monthly Average Return B. Monthly Cost Averaging C. Return Cost Averaging D. Dollar Cost Averaging Accompanies: Financial Literacy: Investing 1

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