1. What are the benefits of saving part of one’s income?

Chose all answers that are correct.
A) predicting when unforeseen problems will strike
B) being able to afford expensive goods and services
C) avoiding conflicts with others relating to money
D) having the capacity to handle costs related to emergencies

2. Which example is a common type of savings plan?

A) a company stock
B) a mutual fund
C) a certificate of deposit
D) a government bond

3. Which statement about investing in stocks is true?

A) Investors have the chance to loan money to a company in exchange for a fixed return, but it does not grant any ownership of that company.
B) Investors have the chance to pool their money with that of other individuals and groups, but it offers little freedom with regard to withdrawing one’s money from the pool.
C) Investors have the chance to own part of a company and potentially earn a high return, but it carries with it a larger level of risk.
D) Investors have the chance to ensure that they will see a fixed return on their investment, but that return will be relatively low.
Assessment

4. What is the correct definition of a bond?

A) an agreement in which an investor receives money from a company or government, and the company or government benefits from the labor of the investor
B) an agreement in which an investor pays to own a certain portion or percentage of a company, and the company pays the investor dividends based on how it performs
C) an agreement in which an investor loans money to a company or government, and the company or government promises to repay the loan with interest over a period of time
D) an agreement in which an investor deposits money in a bank account, and the bank invests that money with a promise to split any returns with the investor

5. Why do many people choose to invest in mutual funds?

A) Mutual funds offer investors the most possible freedom and the greatest potential returns, while requiring them to take on zero risk.
B) Mutual funds pay dividends to investors regardless of whether or not the investments the fund makes offer substantial returns.
C) Mutual funds are run by individual investors, rather than privately employed finance-industry experts, so the fees for investing in them are very low.
D)Mutual funds pool the money of many individuals and groups to purchase a wide variety of stocks and bonds, which reduces the risk faced by investors.