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Questions and Answers
Savings can be defined as 'the portion of disposable income not spent on _____.
Savings can be defined as 'the portion of disposable income not spent on _____.
Compound interest can only be computed on the original amount borrowed.
Compound interest can only be computed on the original amount borrowed.
False
What does SIP stand for?
What does SIP stand for?
Systematic Investment Plan
Savings is the ____ of income over expenditure.
Savings is the ____ of income over expenditure.
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Match the following terms with their descriptions:
Match the following terms with their descriptions:
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Which of the following correctly defines speculation?
Which of the following correctly defines speculation?
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Tax benefits are available for SIP.
Tax benefits are available for SIP.
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Under Savings people use their ____ money.
Under Savings people use their ____ money.
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What is speculation primarily characterized by?
What is speculation primarily characterized by?
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Bulls and bears are types of long-term investors.
Bulls and bears are types of long-term investors.
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What are the two main categories of speculators in the stock market?
What are the two main categories of speculators in the stock market?
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The formula for calculating return on investment is: (Sale Value of the price - Purchase price) + Cash received / Purchase Price * 100. Mr. Surya's return was _____%.
The formula for calculating return on investment is: (Sale Value of the price - Purchase price) + Cash received / Purchase Price * 100. Mr. Surya's return was _____%.
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Which of the following is NOT an objective of investment?
Which of the following is NOT an objective of investment?
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The value of money remains constant over time.
The value of money remains constant over time.
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What is the difference between simple interest and compound interest?
What is the difference between simple interest and compound interest?
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What is the future value of an investment of ₹100 after 5 years at a 5% interest rate when compounded annually?
What is the future value of an investment of ₹100 after 5 years at a 5% interest rate when compounded annually?
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The future value of a series of investments of ₹100 at 5% compounded annually after 5 years is ₹552.6.
The future value of a series of investments of ₹100 at 5% compounded annually after 5 years is ₹552.6.
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What does SIP stand for in investment terms?
What does SIP stand for in investment terms?
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The present value of ₹121 to be received after 2 years, discounted at 10%, is ______.
The present value of ₹121 to be received after 2 years, discounted at 10%, is ______.
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Match the following interest types with their respective future values in 10 years.
Match the following interest types with their respective future values in 10 years.
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Which of the following is NOT a salient feature of SIP?
Which of the following is NOT a salient feature of SIP?
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The future value when using a one-time investment of ₹100 at a 5% rate for 5 years is greater than the future value of a series of investments of ₹100 at the same rate for the same duration.
The future value when using a one-time investment of ₹100 at a 5% rate for 5 years is greater than the future value of a series of investments of ₹100 at the same rate for the same duration.
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What is the formula used to calculate the present value?
What is the formula used to calculate the present value?
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Which of the following is considered a financial asset?
Which of the following is considered a financial asset?
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Saving and investing refer to the same concept.
Saving and investing refer to the same concept.
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What is the primary purpose of saving?
What is the primary purpose of saving?
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Investments involve an element of __________ in relation to return and the principal amount.
Investments involve an element of __________ in relation to return and the principal amount.
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Match the following types of expenses with their categories:
Match the following types of expenses with their categories:
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Which of the following is NOT a type of investment?
Which of the following is NOT a type of investment?
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The Time Value of Money concept implies that money available today is worth less than the same amount in the future.
The Time Value of Money concept implies that money available today is worth less than the same amount in the future.
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Name one real asset.
Name one real asset.
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Study Notes
Unit 10: Systematic Savings and Investments
- Savings is setting aside cash for future use, avoiding wasteful or uneconomical spending.
- Examples of wasteful expenditure include buying unnecessary items instead of essential stationery.
- Non-economical spending involves purchasing expensive items when cheaper options exist, failing to utilize funds effectively.
- Savings can be defined as the portion of disposable income not spent on consumption.
- Savings and investment are often confused, but they are distinct.
- Savings involve storing money safely (e.g., bank, locker) to meet future needs or expenses.
- Investment is employing funds in financial or real assets to generate profit.
- Investments aim for long-term gains, while savings prioritize short-term financial security.
- Returns from savings are generally fixed, while investment returns vary due to market conditions and demand.
- Savings risk is minimal, while investments carry potential risk of loss of principal and/or lower returns.
- Investments are necessary to safeguard funds from various losses ( theft ), and to gain a higher return above inflation.
Types of Investments
-
Financial Assets:
- Equity shares
- Preference shares
- Share warrants
- Exchange Traded Funds (ETFs)
- Global Depository Receipts (GDRs)
- Units of mutual funds
- Debentures
- Debt securities
- Commercial papers
- Deposits with companies and banks
- Post office savings certificates
- Provident Fund (PF) investments
- Insurance policies
-
Real Assets:
- Real estate
- Gold
- Silver
- Diamonds
- Art pieces/Artifacts
- Stamps
- Coins
- Antiques
Speculation
- Short-term investments are considered speculation, focused on capitalizing on price fluctuations.
- Speculators in stock markets include bulls and bears.
Time Value of Money
- The present value of money is worth more than its future value.
- The potential for the value of money to change over time (to increase or decrease) based on various factors and circumstances.
Interest
- Interest is a charge for borrowing money, often expressed as a percentage.
- Simple interest is calculated only on the principal amount, while compound interest considers accumulated interest.
Systematic Investment Plan (SIP)
- A strategy for regular investments in financial assets at predetermined intervals (monthly or quarterly).
- SIP allows for regular investments in various financial assets, even small amounts.
- Investors have control over the investment amount and date.
Key Differences Between Savings and Investments
- Savings are for short-term needs, while investments are for long-term growth.
- Savings risk is low, while investments have varying degrees of risk.
- Savings returns are fixed, while investment returns fluctuate.
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Description
Explore the key differences between savings and investments in this quiz. Understand how savings prioritize financial security and how investments aim for long-term gains. Test your knowledge on the importance of managing expenses and making informed financial decisions.
