Copy of Unit 3 Investment Test PM (5/21/2025)

Instructions

Required

1

Jordan is reviewing her financial assets and wants to understand how easily she can access her funds in case of an emergency. She asks her financial advisor which measure tells her how quickly her investments can be turned into cash without losing value.
Which financial term is her advisor most likely referring to?

Collateral

Liquidity

Equity

Required

1

Victoria recently set aside money in a separate savings account labeled “Emergency Fund.” She wants to be financially prepared for the unexpected.
What is the primary purpose of Victoria’s emergency fund?

It is for her to use to pay for unexpected expenses like medical bills or car repairs.

It is for her to use for retirement.

It is for her to use for vacations and luxury purchases.

Required

1

Hunter invested $1,000 and discovered that, at an 8% interest rate, his money would double in approximately 9 years. He didn’t use a calculator—just a simple mental shortcut.
What method did Hunter most likely use to figure this out?

Future Value Formula

Rule of 72 Formula

Simple Interest Formula

Required

1

Alexa started a job at Scheels, a FOR PROFIT ORGANIZATION, and was offered a retirement plan. What is the name of the retirement plan offered by her employer?

IRA Plan

403(b) Plan

401(k) Plan

Required

1

Nick and Kia both invested in their company's 401(k) plan. What statement is true about Nick and Kia investment decision?

They are taking advantage of a retirement savings plan that may include employer matching and tax benefits.

They can access their money at any time without penalties.

The employer's match will not make a difference on Nick and Kia's investment.

Required

1

What professional could you hire if you would like to purchase stock on the stock market through a brokerage firm?

Accountant

Stockbroker

Loan Officer

Required

1

Jamal is a high school student who wants to start managing his money more wisely. He sets a goal to save up enough money within the next few months to buy a new laptop for school.
Which type of goal is Jamal setting?

A medium-term goal

A short-term goal

A long-term goal

Required

2

Required

1

Lena has money invested in a savings account that earns a small amount of interest each year. Recently, she noticed that the prices of groceries, gas, and other everyday items have been rising quickly. Despite earning interest, her money doesn’t seem to stretch as far as it used to.
What is Lena experiencing?

inflation risk

industry risk

political risk

Required

1

Caleb contributes regularly to his Individual Retirement Account (IRA), which is tax-deferred. He’s trying to understand how this affects his taxes.
What does it mean that Caleb’s IRA is tax-deferred?

He pays taxes on the money before he contributes it.

It means that he doesn’t have to pay taxes on the interest earned.

He will pay taxes on the money when he withdraws it during retirement.

Required

1

Ben has just secured his first job, and has the opportunity to invest in several different types of investments. He has chosen to “spread his assets out over several different investments” to reduce his risk of loss. What concept has he applied?

He has applied diversification.

He has applied inflation risk.

He has applied contingencies.

Required

1

Wyatt owns stock in a telecommunications company. Recently, he received a payment from the company that represents a share of its profits. He's excited because it's a return on his investment.
What did Wyatt receive?

A dividend

A commission

A bonus

Required

1

Todd has an investment portfolio. He has closely examined each of his investments and calculated his return on investment (ROI). What does the ROI tell him about his investments?

It tells the investor how much their investment as increased.

It tells the investor how much money they owe.

It tells the investor how much money they need to spend.

Required

1

Arthur has implemented the “pay yourself first” strategy as part of his budget planning. What is Arthur doing?

He is setting money aside for savings before he pays his bills.

He is saving as little money as possible.

He is charging as much as possible on his credit cards.

Required

1

Alice has an investment that allows her to have DIVERSIFIED holdings with the ONE INVESTMENT. What type of investment does she have?

She has a conservative investment.

She has a mutual fund.

She has a growth stock.

Required

1

Gerald likes to invest in the stock market. His current investments in the stock market have not been performing very well, but he has been able to pick up many stocks for cheap prices. What type of market condition is he experiencing?

economic market

bear market

bull market

Required

1

He won’t have to pay taxes on the interest or earnings from them

It allows him to pay fees on his investments.

He won’t have to pay taxes on the interest or earnings from them.

It allows him to pay more taxes.

Required

1

Bella would like to invest in an investment that would yield high earnings. She is not afraid to take risks. Which investment would allow her to earn lots of money, but carry a high risk? (Top of the risk pyramid)

savings accounts and low-yield bonds

certificate of deposits

investing in the stock market

Required

1

Jane has an investment portfolio. She wants to ensure that it will continue to grow for her retirement. Which of the characteristics should she be sure that her portfolio meets?

It should be based solely on her favorite stocks.

It should have a strong foundation of safe investments and be diversified.

It should include high-risk investments all together.

Required

1

Lucy has been dabbling in the stock market since she graduated from college. She hasn’t always had the best returns on her stocks, but lately things have been very profitable and she has made large profits on her stock ventures. What type of financial market is she experiencing lately?

bear market

financial market

bull market

Required

1

Jorge is a junior in high school. His baseball team has been recognized as the best in the state, which has earned the team a chance to take a trip to visit the Minnesota Twins, and attend some training clinics with the Twins. he will need $2,000 for the trip. His parents are offering to pay for half of the trip, and the school will contribute $500 for the cost of the trip. Jorge will need to come up with the remaining $500. Which of the following assets would be the most liquid?

His U.S. Savings Bond

His baseball card collection

His Savings Account

Required

1

Ella recently opened an Individual Retirement Account (IRA) and started making regular contributions to it. She wants to make sure she’s planning wisely for her financial future.
What is the main purpose of Ella’s IRA?

To pay off short-term debt quickly

It is an account that allows for her money to be pledged for CDs (Certificate of Deposit).

To invest for long-term retirement savings with potential tax advantages.

Required

1

Brian is a nurse. He works for a NONPROFIT hospital. As an employee of the hospital, he can contribute to an employer sponsored retirement plan. Which retirement plan would his company be using?

403(b) Plan

Roth IRA Plan

401(k) Plan

Required

1

Miska is interested in investing in several stocks. He has downloaded a copy of the annual report from each of the company's websites. What is an annual report?

It is a company's report on its insurance payments.

It is a company's report on the theft of its products.

It is a company's report about the company's financial condition to shareholders.

Required

1

Evan and Kira file their taxes every year. Which agency has the responsibility of collecting their taxes?

The Internal revenue Service (IRS)

The department of Treasury

The Securities and Exchange Commision (SEC)

Required

1

Carlos recently began investing in the stock market. He’s learning about the different ways people can earn money through their stock investments.
Which of the following is one way Carlos could make money from stocks?

Receiving dividends or selling the stocks for more than he paid.

Selling the stock for a higher price than originally purchased for,

Charging companies a fee for holding their stock.

Required

1

Maya recently purchased shares in a publicly held company through the stock market. She now owns a small portion of that company and is excited to see how her investment performs.
What is Maya’s ownership in the company called?

Money market

Share of stock

Commodity

Required

1

The Thomas Car Wash is a private company but is in the process of becoming a publicly traded company. The owner of the company decided to offer his private company's stock to be publicly traded on the stock market exchange. What is it called when a company offers its stock to the public for the FIRST TIME to be traded on the stock market?

limit order

initial public offering (IPO)

market order

Required

1

The city of Sioux Falls needs money to build a new baseball stadium. In order to do this, they decide to pursue loans from the citizens. What is this type of debt instrument (loan) issued by a corporation or government called?

commodity

futures contract

bond

Required

1

Sophia is deciding between two investment options: one offers a high potential return but comes with a greater chance of losing money, while the other is safer but has lower expected returns. She wants to understand how the level of risk affects what she might earn.
What best describes the relationship between investment risk and returns?

The higher the risk, the lower the possible return or loss

Higher risk usually means higher potential returns, but also greater chance of loss.

The lower the risk, the greater the possible return or loss

Required

1

Jasmine is deciding between two options for her extra money: putting it in a savings account at her bank or investing it in the stock market. She wants to understand the key differences between these choices.
How does investing in the stock market differ from saving money in a bank account?

Stock market investments typically offer higher potential returns but come with more risk, while savings accounts offer lower returns with more security.

Money in the stock market is guaranteed by the government, but savings accounts are not.

Savings accounts usually earn more money than the stock market over time.

Required

1

Emma is reviewing how her savings grow over time. She learns that her interest earnings are added back to her account balance, which then earns interest itself in the following periods.
Which of the following statements about compound interest is TRUE?

Compound interest directly impacts how much you will be charged in fees

Compound interest is difficult to calculate, so those who use it earn higher profits for their efforts

Compound interest allows you to earn interest not only on the amount you have saved, but also on the interest you've already earned

Required

1

Jamie is deciding how to invest her money. She wonders if it’s better to invest all in one company or to spread her money across different types of investments like stocks, bonds, and real estate.
Why might Jamie choose to diversify her investments?

If you diversify your portfolio, you will definitely earn a high return

To reduce risk by not putting all her money into one investment.

Investing in a diversified portfolio guarantees that you won’t lose money with your investments

Required

1

Liam is exploring different ways to invest his money. He learns about stocks and bonds but wants to understand the key differences between the two.
How is a bond different from a stock?

Bonds are typically riskier than stocks but have the potential to earn higher returns

Bonds are best for earning high returns while stocks are best for providing a stable source of income

A bond is a loan you give to an organization while a stock is partial ownership in a company

Required

1

Sophia is planning for her retirement and is trying to decide between opening a Roth IRA or a Traditional IRA. She wants to understand the key differences to make the best choice.
Which is an important question Sophia should ask when deciding between a Roth IRA and a Traditional IRA?

Do I want to take advantage of my employer’s matching contribution?

Do I want to take on more or less risk?

Do I want to pay taxes now or later?

Required

1

Sanjana is talking to her younger brother about how people receive income after they retire. She wants to explain what Social Security means in a simple way.
Which of the following descriptions should Sanjana use to explain Social Security?

A program that provides retirement, disability, and survivor benefits/income funded by payroll taxes.

Social Security is a type of retirement savings plan that you can open through a brokerage firm

Social Security is a type of retirement savings plan offered by some employers

Required

5

What is ONE concept from this unit that you believe would help you achieve financial success now and/or in the future? 1. Name the term (1 point) 2. Define the term (1 point) 3. In three to five sentences, explain how this concept will promote your financial stability and health.
(3 points)

Term Ideas:
401(k)
IRA
Diversification
Mutual Fund
Stocks

Copy of Unit 3 Investment Test PM (5/21/2025)

Victoria recently set aside money in a separate savings account labeled “Emergency Fund.” She wants to be financially prepared for the unexpected.What is the primary purpose of Victoria’s emergency fund?

Hunter invested $1,000 and discovered that, at an 8% interest rate, his money would double in approximately 9 years. He didn’t use a calculator—just a simple mental shortcut.What method did Hunter most likely use to figure this out?

Alexa started a job at Scheels, a FOR PROFIT ORGANIZATION, and was offered a retirement plan. What is the name of the retirement plan offered by her employer?

Nick and Kia both invested in their company's 401(k) plan. What statement is true about Nick and Kia investment decision?

What professional could you hire if you would like to purchase stock on the stock market through a brokerage firm?

Jamal is a high school student who wants to start managing his money more wisely. He sets a goal to save up enough money within the next few months to buy a new laptop for school.Which type of goal is Jamal setting?

Caleb contributes regularly to his Individual Retirement Account (IRA), which is tax-deferred. He’s trying to understand how this affects his taxes.What does it mean that Caleb’s IRA is tax-deferred?

Ben has just secured his first job, and has the opportunity to invest in several different types of investments. He has chosen to “spread his assets out over several different investments” to reduce his risk of loss. What concept has he applied?

Wyatt owns stock in a telecommunications company. Recently, he received a payment from the company that represents a share of its profits. He's excited because it's a return on his investment.What did Wyatt receive?

Todd has an investment portfolio. He has closely examined each of his investments and calculated his return on investment (ROI). What does the ROI tell him about his investments?

Arthur has implemented the “pay yourself first” strategy as part of his budget planning. What is Arthur doing?

Alice has an investment that allows her to have DIVERSIFIED holdings with the ONE INVESTMENT. What type of investment does she have?

Gerald likes to invest in the stock market. His current investments in the stock market have not been performing very well, but he has been able to pick up many stocks for cheap prices. What type of market condition is he experiencing?

He won’t have to pay taxes on the interest or earnings from them

Bella would like to invest in an investment that would yield high earnings. She is not afraid to take risks. Which investment would allow her to earn lots of money, but carry a high risk? (Top of the risk pyramid)

Jane has an investment portfolio. She wants to ensure that it will continue to grow for her retirement. Which of the characteristics should she be sure that her portfolio meets?

Lucy has been dabbling in the stock market since she graduated from college. She hasn’t always had the best returns on her stocks, but lately things have been very profitable and she has made large profits on her stock ventures. What type of financial market is she experiencing lately?

Ella recently opened an Individual Retirement Account (IRA) and started making regular contributions to it. She wants to make sure she’s planning wisely for her financial future.What is the main purpose of Ella’s IRA?

Brian is a nurse. He works for a NONPROFIT hospital. As an employee of the hospital, he can contribute to an employer sponsored retirement plan. Which retirement plan would his company be using?

Miska is interested in investing in several stocks. He has downloaded a copy of the annual report from each of the company's websites. What is an annual report?

Evan and Kira file their taxes every year. Which agency has the responsibility of collecting their taxes?

Carlos recently began investing in the stock market. He’s learning about the different ways people can earn money through their stock investments.Which of the following is one way Carlos could make money from stocks?

Maya recently purchased shares in a publicly held company through the stock market. She now owns a small portion of that company and is excited to see how her investment performs.What is Maya’s ownership in the company called?

The city of Sioux Falls needs money to build a new baseball stadium. In order to do this, they decide to pursue loans from the citizens. What is this type of debt instrument (loan) issued by a corporation or government called?

Jasmine is deciding between two options for her extra money: putting it in a savings account at her bank or investing it in the stock market. She wants to understand the key differences between these choices.How does investing in the stock market differ from saving money in a bank account?

Emma is reviewing how her savings grow over time. She learns that her interest earnings are added back to her account balance, which then earns interest itself in the following periods.Which of the following statements about compound interest is TRUE?

Jamie is deciding how to invest her money. She wonders if it’s better to invest all in one company or to spread her money across different types of investments like stocks, bonds, and real estate.Why might Jamie choose to diversify her investments?

Liam is exploring different ways to invest his money. He learns about stocks and bonds but wants to understand the key differences between the two.How is a bond different from a stock?

Sophia is planning for her retirement and is trying to decide between opening a Roth IRA or a Traditional IRA. She wants to understand the key differences to make the best choice.Which is an important question Sophia should ask when deciding between a Roth IRA and a Traditional IRA?

Sanjana is talking to her younger brother about how people receive income after they retire. She wants to explain what Social Security means in a simple way.Which of the following descriptions should Sanjana use to explain Social Security?

Victoria recently set aside money in a separate savings account labeled “Emergency Fund.” She wants to be financially prepared for the unexpected.What is the primary purpose of Victoria’s emergency fund?

Hunter invested $1,000 and discovered that, at an 8% interest rate, his money would double in approximately 9 years. He didn’t use a calculator—just a simple mental shortcut.What method did Hunter most likely use to figure this out?

Alexa started a job at Scheels, a FOR PROFIT ORGANIZATION, and was offered a retirement plan. What is the name of the retirement plan offered by her employer?

Nick and Kia both invested in their company's 401(k) plan. What statement is true about Nick and Kia investment decision?

What professional could you hire if you would like to purchase stock on the stock market through a brokerage firm?

Jamal is a high school student who wants to start managing his money more wisely. He sets a goal to save up enough money within the next few months to buy a new laptop for school.Which type of goal is Jamal setting?

Caleb contributes regularly to his Individual Retirement Account (IRA), which is tax-deferred. He’s trying to understand how this affects his taxes.What does it mean that Caleb’s IRA is tax-deferred?

Ben has just secured his first job, and has the opportunity to invest in several different types of investments. He has chosen to “spread his assets out over several different investments” to reduce his risk of loss. What concept has he applied?

Wyatt owns stock in a telecommunications company. Recently, he received a payment from the company that represents a share of its profits. He's excited because it's a return on his investment.What did Wyatt receive?

Todd has an investment portfolio. He has closely examined each of his investments and calculated his return on investment (ROI). What does the ROI tell him about his investments?

Arthur has implemented the “pay yourself first” strategy as part of his budget planning. What is Arthur doing?

Alice has an investment that allows her to have DIVERSIFIED holdings with the ONE INVESTMENT. What type of investment does she have?

Gerald likes to invest in the stock market. His current investments in the stock market have not been performing very well, but he has been able to pick up many stocks for cheap prices. What type of market condition is he experiencing?

He won’t have to pay taxes on the interest or earnings from them

Bella would like to invest in an investment that would yield high earnings. She is not afraid to take risks. Which investment would allow her to earn lots of money, but carry a high risk? (Top of the risk pyramid)

Jane has an investment portfolio. She wants to ensure that it will continue to grow for her retirement. Which of the characteristics should she be sure that her portfolio meets?

Lucy has been dabbling in the stock market since she graduated from college. She hasn’t always had the best returns on her stocks, but lately things have been very profitable and she has made large profits on her stock ventures. What type of financial market is she experiencing lately?

Ella recently opened an Individual Retirement Account (IRA) and started making regular contributions to it. She wants to make sure she’s planning wisely for her financial future.What is the main purpose of Ella’s IRA?

Brian is a nurse. He works for a NONPROFIT hospital. As an employee of the hospital, he can contribute to an employer sponsored retirement plan. Which retirement plan would his company be using?

Miska is interested in investing in several stocks. He has downloaded a copy of the annual report from each of the company's websites. What is an annual report?

Evan and Kira file their taxes every year. Which agency has the responsibility of collecting their taxes?

Carlos recently began investing in the stock market. He’s learning about the different ways people can earn money through their stock investments.Which of the following is one way Carlos could make money from stocks?

Maya recently purchased shares in a publicly held company through the stock market. She now owns a small portion of that company and is excited to see how her investment performs.What is Maya’s ownership in the company called?

The city of Sioux Falls needs money to build a new baseball stadium. In order to do this, they decide to pursue loans from the citizens. What is this type of debt instrument (loan) issued by a corporation or government called?

Jasmine is deciding between two options for her extra money: putting it in a savings account at her bank or investing it in the stock market. She wants to understand the key differences between these choices.How does investing in the stock market differ from saving money in a bank account?

Emma is reviewing how her savings grow over time. She learns that her interest earnings are added back to her account balance, which then earns interest itself in the following periods.Which of the following statements about compound interest is TRUE?

Jamie is deciding how to invest her money. She wonders if it’s better to invest all in one company or to spread her money across different types of investments like stocks, bonds, and real estate.Why might Jamie choose to diversify her investments?

Liam is exploring different ways to invest his money. He learns about stocks and bonds but wants to understand the key differences between the two.How is a bond different from a stock?

Sophia is planning for her retirement and is trying to decide between opening a Roth IRA or a Traditional IRA. She wants to understand the key differences to make the best choice.Which is an important question Sophia should ask when deciding between a Roth IRA and a Traditional IRA?

Sanjana is talking to her younger brother about how people receive income after they retire. She wants to explain what Social Security means in a simple way.Which of the following descriptions should Sanjana use to explain Social Security?

Victoria recently set aside money in a separate savings account labeled “Emergency Fund.” She wants to be financially prepared for the unexpected.
What is the primary purpose of Victoria’s emergency fund?

Hunter invested $1,000 and discovered that, at an 8% interest rate, his money would double in approximately 9 years. He didn’t use a calculator—just a simple mental shortcut.
What method did Hunter most likely use to figure this out?

Jamal is a high school student who wants to start managing his money more wisely. He sets a goal to save up enough money within the next few months to buy a new laptop for school.
Which type of goal is Jamal setting?

Caleb contributes regularly to his Individual Retirement Account (IRA), which is tax-deferred. He’s trying to understand how this affects his taxes.
What does it mean that Caleb’s IRA is tax-deferred?

Wyatt owns stock in a telecommunications company. Recently, he received a payment from the company that represents a share of its profits. He's excited because it's a return on his investment.
What did Wyatt receive?

Ella recently opened an Individual Retirement Account (IRA) and started making regular contributions to it. She wants to make sure she’s planning wisely for her financial future.
What is the main purpose of Ella’s IRA?

Carlos recently began investing in the stock market. He’s learning about the different ways people can earn money through their stock investments.
Which of the following is one way Carlos could make money from stocks?

Maya recently purchased shares in a publicly held company through the stock market. She now owns a small portion of that company and is excited to see how her investment performs.
What is Maya’s ownership in the company called?

Jasmine is deciding between two options for her extra money: putting it in a savings account at her bank or investing it in the stock market. She wants to understand the key differences between these choices.
How does investing in the stock market differ from saving money in a bank account?

Emma is reviewing how her savings grow over time. She learns that her interest earnings are added back to her account balance, which then earns interest itself in the following periods.
Which of the following statements about compound interest is TRUE?

Jamie is deciding how to invest her money. She wonders if it’s better to invest all in one company or to spread her money across different types of investments like stocks, bonds, and real estate.
Why might Jamie choose to diversify her investments?

Liam is exploring different ways to invest his money. He learns about stocks and bonds but wants to understand the key differences between the two.
How is a bond different from a stock?

Sophia is planning for her retirement and is trying to decide between opening a Roth IRA or a Traditional IRA. She wants to understand the key differences to make the best choice.
Which is an important question Sophia should ask when deciding between a Roth IRA and a Traditional IRA?

Sanjana is talking to her younger brother about how people receive income after they retire. She wants to explain what Social Security means in a simple way.
Which of the following descriptions should Sanjana use to explain Social Security?

Victoria recently set aside money in a separate savings account labeled “Emergency Fund.” She wants to be financially prepared for the unexpected.
What is the primary purpose of Victoria’s emergency fund?

Hunter invested $1,000 and discovered that, at an 8% interest rate, his money would double in approximately 9 years. He didn’t use a calculator—just a simple mental shortcut.
What method did Hunter most likely use to figure this out?

Jamal is a high school student who wants to start managing his money more wisely. He sets a goal to save up enough money within the next few months to buy a new laptop for school.
Which type of goal is Jamal setting?

Caleb contributes regularly to his Individual Retirement Account (IRA), which is tax-deferred. He’s trying to understand how this affects his taxes.
What does it mean that Caleb’s IRA is tax-deferred?

Wyatt owns stock in a telecommunications company. Recently, he received a payment from the company that represents a share of its profits. He's excited because it's a return on his investment.
What did Wyatt receive?

Ella recently opened an Individual Retirement Account (IRA) and started making regular contributions to it. She wants to make sure she’s planning wisely for her financial future.
What is the main purpose of Ella’s IRA?

Carlos recently began investing in the stock market. He’s learning about the different ways people can earn money through their stock investments.
Which of the following is one way Carlos could make money from stocks?

Maya recently purchased shares in a publicly held company through the stock market. She now owns a small portion of that company and is excited to see how her investment performs.
What is Maya’s ownership in the company called?

Jasmine is deciding between two options for her extra money: putting it in a savings account at her bank or investing it in the stock market. She wants to understand the key differences between these choices.
How does investing in the stock market differ from saving money in a bank account?

Emma is reviewing how her savings grow over time. She learns that her interest earnings are added back to her account balance, which then earns interest itself in the following periods.
Which of the following statements about compound interest is TRUE?

Jamie is deciding how to invest her money. She wonders if it’s better to invest all in one company or to spread her money across different types of investments like stocks, bonds, and real estate.
Why might Jamie choose to diversify her investments?

Liam is exploring different ways to invest his money. He learns about stocks and bonds but wants to understand the key differences between the two.
How is a bond different from a stock?

Sophia is planning for her retirement and is trying to decide between opening a Roth IRA or a Traditional IRA. She wants to understand the key differences to make the best choice.
Which is an important question Sophia should ask when deciding between a Roth IRA and a Traditional IRA?

Sanjana is talking to her younger brother about how people receive income after they retire. She wants to explain what Social Security means in a simple way.
Which of the following descriptions should Sanjana use to explain Social Security?