FREE AND STUDY GAMES ABOUT ECONCHAPTER8 EXAM

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FREE AND STUDY GAMES ABOUT ECONCHAPTER8 EXAM

QUESTIONS

Actual Qs and Ans Expert-Verified Explanation

This Exam contains:

-Guarantee passing score -18 Questions and Answers -format set of multiple-choice -Expert-Verified Explanation

Question 1: Risk

Answer:

Degree of uncertainty of return on an asset.

Question 2: Mutual Fund

Answer:

A pool of money managed by an investment company and invested in multiple companies.Question 3: Explain the risk return ratio:

Answer:

This is used by investors to compare the expected returns of an investment to the amount of risk they take to get the returns.Question 4: True/False: A single stock would be a good place to keep your emergency fund

Answer:

False

Question 5: True/False: Diversification lowers risk with investing

Answer:

True Question 6: Long-term investments properly diversified include the following:

Answer:

Growth, growth and income, international, and aggressive growth.

Question 7: Portfolio

Answer:

A list of all of your investments.

Question 8: Explain what the rule of 72 is and how it is calculated

Answer:

The rule of 72 is a simple way to determine how long an investment will take to double given a fixed annual rate of interest. By dividing 72 by the annual rate of return, investors obtain a rough estimate of how many years it'll take the investment to 2x

Question 9: Share

Answer:

A piece of ownership in a company, mutual fund or other investment.Question 10: Explain why single stocks carry a high degree of risk and why mutual funds carry less risk.

Answer:

Single stocks carry a high degree of risk because you can not predict what one company will do. Mutual funds are less risky because you have, on average, 90-120 Page 2 companies in that fund.

Question 11: Investment

Answer:

An account or arrangement in which one would put their money for long-term growth.Question 12: Explain why you should never invest using borrowed money:

Answer:

This is a bad idea because it increases the risk of the investment.

Question 13: Which of the following is a good investment option?

Answer:

Mutual funds.

Question 14: 401(k)

Answer:

A retirement savings plan offered by a corporation to its employees; The employee contributes money from his/her gross pay, and the money grows tax deferred.

Question 15: Liquidity

Answer:

Quality of an asset that permits it to be converted quickly into cash without loss of value.

Question 16: Is real estate a liquid investment? Explain why or why not.

Answer:

Real estate is not considered a liquid investment because it can not be quickly converted into straight cash.

Question 17: IRA

Answer:

Tax-deferred arrangement for individuals with earned income; Individual retirement arrangement.

Question 18: Which statement is true about liquidity?

Answer:

The more liquid an investment, the less return.