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PF3: Risk/return, simple/compound interest, APR

Last updated about 6 years ago

5 questions

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1

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Question 1

1.

How are risk and return related to each other?

There is no predictable relationship between risk and return

The lower the risk the higher the potential return

All investments have the same degree of risk

The higher the risk the higher the potential return

Question 2

2.

Which of the following investment options above are covered by FDIC insurance?

Commodities

Real Estate

Bonds

Savings accounts

Mutual funds

Checking accounts

Stocks

Certificates of deposit

Question 3

3.

Which of the following investment options above would NOT be appropriate for a short term savings goal?

Savings account

Checking account

Certificate of deposit

Stocks

Question 4

4.

Ben is choosing between 2 savings accounts. Both accounts pay 3% interest. Account X pays compound interest while account Y pays simple interest. Ben should choose account X because

the interest would be tax free

the interest rate would increase over time

the interest rate would decrease over time

it would pay interest on interest

Question 5

5.

When shopping for a loan from different lenders what's the first thing to consider?

additionl fees the lender might charge you

the annual percentage rate (APR)

how much is being borrowed

the length of the loan