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Saving & investing
Terms in this set (42)
In the future, a dollar will be worth_____ than a dollar today.
A Roth IRA grows tax ______ and a Traditional IRA grows tax _____
FREE & deferred
Explain why investment experts recommend diversifying investments?
It reduces investment risk by putting money in several different types of investments
The basic rule of risk-to-return relationship is that the:
Lower the risk, the lower the return rate
Higher the risk, the higher the return rate
Out of the following, what type of investment has the lowest risk and lowest rate of return?
If you have $2,000 invested in a Roth IRA, what is true about your contribution?
You have already paid taxes on the money, so it will grow tax free.
Which of the following statements about a 401 (k) is FALSE?
It grows tax-free.
Out of the following, which type of investment has the highest risk and the highest potential rate of return?
Which of the following is true about mutual funds?
Mutual funds are convenient and professionally managed
What is the best option for your retirements plan when you leave a company?
Roll it over by a direct transfer to an IRA
The reason the time value of money concept works is because of the dynamics of ___________________, the idea of earning interest on interest.
What approximate interest rate would an investor need to earn in order to double the value of an investment in five years?
72/5 years = 14.4% interest
If an investor can earn 8 percent on an investment, approximately how long will it take to double in value?
72/8 = 9 Years
What is the difference between saving and investing
Saving is what people usually do to meet short-term goals. It is putting money aside for future use. Investing means you're setting your money aside for longer-term goals. It is putting your money into something that offers the possibility of growing in value as interest, income, or increased value.
If you bought stock X for $20 per share in 2005, then sold it for $35 per share in 2010, your capital _________ would be _______ per share.
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