Questions and Answers
How is a savings account most useful?
In what way does a 401(k) differ from an individual retirement account (IRA)?
According to the pie graph, among people 65 and over, investment income represents the:
Which is an example of a high-risk investment?
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What does the information about Gale's investments demonstrate?
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What does the information demonstrate about Alex's investments?
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When investors purchase a commodity, they believe:
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Which statement best describes stocks?
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Which investment is best for someone who is likely to need cash soon?
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Which investment has the least liquidity?
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Study Notes
Savings Account
- Best for using money in the near future without immediate needs.
- Not ideal for long-term, ongoing savings or frequent transactions.
401(k) vs. IRA
- A 401(k) is employer-sponsored, contrasting with individual retirement accounts (IRAs).
- Contributions to a 401(k) can be made before taxes.
Income Sources for Seniors
- In 2010, investment income was the fourth largest source of income for individuals aged 65 and older.
High-Risk Investments
- Stocks in start-up companies are categorized as high-risk investments due to their volatility and potential for loss.
Investment Diversification - Gale
- Gale's investments varied, indicating that had she solely invested in stock without diversification, she would face financial losses.
Investment Diversification - Alex
- Alex would have benefited from diversifying his portfolio, reducing risk and potentially increasing profits.
Commodity Investment Belief
- Investors in commodities anticipate a rise in prices post-purchase.
Understanding Stocks
- Stocks represent ownership in a company's growth and earnings, highlighting their role as investments in corporate success.
Best Investment for Immediate Cash Needs
- A savings account is the most suitable investment for individuals needing quick access to cash.
Investment Liquidity
- Corporations are considered the least liquid investment compared to mutual funds, checking accounts, and other liquid assets.
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Description
This quiz focuses on key concepts related to investing and savings accounts. Test your knowledge on the functionalities of various savings and retirement accounts. Perfect for anyone looking to enhance their understanding of personal finance.