True or False: Investments that are riskier tend to provide higher returns over time than investments with less risk.
Ideally, how many months of living expenses should you keep in an emergency fund?
If you needed to borrow $300 and agreed to pay it all back the following month, which would be the lower amount to pay back: $315 or $300 plus 5% interest?
How much life insurance should you purchase if your annual income is $50,000?
The consensus among financial planning and insurance experts is that around 10 times your annual salary is sufficient for most people as a recommendation.
If you invest $10,000 today and earn 8% interest annually, assuming you do not withdraw from or add to the investment, how long will it take for the original investment amount to double in value?
Imagine you have $40,000 to invest and you want a relatively low risk option. Which of the following options would generally present the lowest risk?
Putting all of the money into a fund that tracks the performance of a major stock market index, such as the S&P 500 or the Dow Jones
Putting all of the money into two stocks
Putting all of the money into one stock
Putting all of the money into a new business
Suppose you invest $1,000 in an account providing 5% return each year, so at the end of Year 1, you will earn $50. If you don’t add to that investment and you do not withdraw anything, approximately how much will you earn in interest at the end of Year 5?
The 5% interest will be compounded over time, so in Year 2, you will earn 5% on $1,050 ($1,000 principal invested + the $50 interest at the end of Year 1), which is $52.50, taking the total investment value to $1,102.50. This will continue, year on year, so each year, the value of the return will increase.
Imagine that the interest rate on your savings account is 1% per year and the inflation rate is 2% per year. After one year, how much would you be able to buy with the money in this account?
while your money has grown by 1%, the cost of living has increased by 1% more than that, so the purchasing power of your money has essentially decreased.
Which type of asset generally grows more in value over long periods: stocks, bonds or real estate?
Historically speaking, the US stock market has consistently produced better overall returns than both bonds and real estate over long periods of time.
When interest rates rise, what typically happens to bond prices?
Because the price needs to adjust for the bond to remain competitive in light of the current interest rates.
Which ISN'T a difference between a checking account and a savings account?
While savings accounts usually have better interest than checking accounts, they both earn interest
You can only transfer money from checking accounts to savings
Checking accounts are designed for regular use
Savings accounts are designed for investing long term
A savings account can’t be used for automatic bill pay
Only savings accounts earn interest
Which of these can be used by banks to control inflation?
Reducing the money supply improves the exchange rate and the value of the currency
Reducing the Money Supply
Reduce the amount of imports
Reduce requirements for loans
What is the lower risk investment?
High-yield savings account
Shai K.
10/3/2021
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