True/False
Indicate whether the sentence or statement is true
or false. |
| | 1. | Buying
stocks makes an investor a part owner of a corporation. |
| | 2. | Corporations
are required to issue bonds. |
| | 3. | Treasury
bills are attractive to people with limited money to invest. |
| | 4. | The stock
market is regulated at the state and federal level. |
| | 5. | If a savings
bond is redeemed before it matures, the interest becomes taxable. |
| | 6. | Social
Security will provide enough income for retired people to live comfortably. |
| | 7. | A major
benefit of pension plans is tax savings. |
| | 8. | A Keogh Plan
is a retirement plan for self-employed people. |
| | 9. | Investments
with a lower risk have a lower return. |
| | 10. | A person who
cannot afford investment losses should diversify into stocks and bonds. |
Multiple Choice
Identify the
letter of the choice that best completes the statement or answers the question. |
| | 11. | The saving
of money by an individual a. | benefits the whole economy. | c. | lowers the standard of living. | b. | deprives others of
money to invest. | d. | benefits the saver
only. | | | | |
|
| | 12. | With which
kind of account does a depositor receive a booklet in which to record deposits, withdrawals, and
interest? a. | statement savings
account | c. | certificate of
deposit | b. | money market deposit account | d. | passbook savings account | | | | |
|
| | 13. | A money
market deposit account a. | pays relatively high interest rates. | c. | requires no minimum balance. | b. | pays low interest
rates. | d. | allows unlimited
withdrawals. | | | | |
|
| | 14. | Interest
rates on certificates of deposit depend on a. | minimum balance. | c. | number of withdrawals. | b. | length of
maturity. | d. | federal
insurance. | | | | |
|
| | 15. | Most savings
institutions in the United States a. | are not insured by federal agencies. | c. | insure deposits up to $100,000. | b. | insure deposits over $1
million. | d. | charge a fee for
insurance. | | | | |
|
| | 16. | The money
return a stockholder receives on the amount invested in a company is a a. | capital
loss. | c. | bond. | b. | dividend. | d. | risk. | | | | |
|
| | 17. | All
corporations are required to a. | pay dividends. | c. | issue stock. | b. | pay a fixed rate of
interest. | d. | make a
profit. | | | | |
|
| | 18. | Which of the
following is purchased at half the face value? a. | tax-exempt bond | c. | Treasury note | b. | mutual
fund | d. | savings
bond | | | | |
|
| | 19. | Which of the
following investments has the greatest risk? a. | stock market | c. | Treasury bill | b. | savings
bonds | d. | mutual
fund | | | | |
|
| | 20. | What do
Treasury bills, Treasury notes, and Treasury bonds have in common? a. | all mature in the same
amount of time | b. | all pay the same interest rate | c. | all are exempt from
federal income tax | d. | all are issued by the federal government | | |
|
| | 21. | A major
benefit of a private or personal pension plan is a. | penalty-free withdrawal of funds. | c. | higher tax rate. | b. | deferred federal income
tax. | d. | no federal income
tax. | | | | |
|
| | 22. | The
trade-off for investing in real estate is a. | never getting your money back. | b. | not being able to get
your money back quickly. | c. | being able to sell the property on short
notice. | d. | making a large profit. | | |
|
| | 23. | Investing
savings in several different types of accounts a. | lowers the overall risk. | c. | is a risk-free investment. | b. | increases the
risk. | d. | is only for
self-employed people. | | | | |
|
| | 24. | The interest
earned on contributions to a Roth IRA a. | is tax-free forever. | c. | is taxed yearly. | b. | is taxed when you
withdraw funds. | d. | is taxed at a high
rate. | | | | |
|
| | 25. | The most
risk-free investment is a. | real estate. | c. | an insured passbook savings account. | b. | mutual
funds. | d. | stock. | | | | |
|
Completion
Complete each sentence or
statement. |
| 26. | A person
receives ____________________ on savings for as long as money is in the account.
|
| 27. | A depositor
with a _________________________ records transactions in a booklet.
|
| 28. | ____________________ is the time at which deposits will pay a stated rate of
interest.
|
| 29. | The
trade-off for a _________________________ is a minimum balance requirement.
|
| 30. | A
____________________ with a short-term maturity pays less interest than one with a long-term
maturity.
|
Matching |
| | Match
each item to the correct statement below. a. | saving | b. | interest | c. | time deposits | d. | maturity | e. | certificates of deposit | | |
|
| | 31. | savings
plans that require savers to leave their money on deposit for certain periods of time |
| | 32. | time
deposits that state the amount of the deposit, maturity, and rate of interest being
paid |
| | 33. | payment
people receive when they lend money or allow someone else to use their money |
| | 34. | setting
aside income for a period of time so that it can be used later |
| | 35. | time at
which deposits will pay a stated rate of interest |
| | Match
each item with the correct statement below. a. | stockholders | b. | capital
gain | c. | savings
bonds | d. | brokers | e. | mutual fund | | |
|
| | 36. | company that
pools the money of many individuals to buy investments |
| | 37. | people who
have invested in a corporation and own stock |
| | 38. | people who
act as go-betweens for buyers and sellers of stocks and bonds |
| | 39. | bonds issued
by the federal government as a way of borrowing money |
| | 40. | increase in
value of an asset |
| | Match
each item with the correct statement below. a. | pension plan | b. | Keogh
Plan | c. | IRA | d. | Roth IRA | e. | diversification | | |
|
| | 41. | private
retirement plan that allows people to save a certain amount of untaxed income with tax-deferred
interest |
| | 42. | private
retirement plan that taxes income before it is saved |
| | 43. | company plan
that provides for retirement income |
| | 44. | spreading of
investments to lower overall risk |
| | 45. | retirement
plan for self-employed individuals |