UNIT 4 – TEST REVIEW PLANNING FOR YOUR FUTURE SAVINGS AND INVESTING MONEY MANAGEMENT UNIT 4 – TEST REVIEW PLANNING FOR YOUR FUTURE SAVINGS AND INVESTING

CHAPTER TEN SAVING FOR YOUR FUTURE QUESTION: Financial security begins when you start doing what? ANSWER: SAVING MONEY!

CHAPTER TEN SAVING FOR YOUR FUTURE QUESTION: List three “expected” items that most people save money for? ANSWER: HOUSE, CAR, VACATIONS etc…

CHAPTER TEN SAVING FOR YOUR FUTURE QUESTION: You need to have some savings to take care of the unexpected things that life throws at you. Name three “unexpected” items that you might need your savings for: ANSWER: UNEMPLOYMENT, ACCIDENT, SICKNESS

CHAPTER TEN SAVING FOR YOUR FUTURE QUESTION: The amount of money you have left after your bills is paid is referred to as your ___________? ANSWER: DISCRETIONARY INCOME

CHAPTER TEN SAVING FOR YOUR FUTURE QUESTION: The amount of money deposited into your savings account is known as the __________? ANSWER: PRINCIPAL

CHAPTER TEN SAVING FOR YOUR FUTURE QUESTION: Money paid by the financial institution to the save for the use of their money is known as what? ANSWER: INTEREST

CHAPTER TEN SAVING FOR YOUR FUTURE QUESTION: When interest is computed on the original principal plus accumulated interest, it is called what? ANSWER: COMPOUNDING INTEREST

CHAPTER TEN SAVING FOR YOUR FUTURE QUESTION: In class we discussed a few ways people “save” their money. Name one: ANSWERS: REGULAR SAVINGS ACCOUNT CERTIFICATE OF DEPOSIT MONEY MARKET FUND

CHAPTER TEN SAVING FOR YOUR FUTURE QUESTION: When assets can be easily converted into cash without a loss in value they are called what? ANSWER: LIQUID

CHAPTER TEN SAVING FOR YOUR FUTURE QUESTION: Name a “pro” and a “con” about putting money into a regular savings account? ANSWER: PRO: HIGH LIQUIDITY CON: LOW INTEREST RATE

CHAPTER TEN SAVING FOR YOUR FUTURE QUESTION: In class we discussed five factors that you should consider when setting up your savings. Can you name any of them? ANSWERS: LIQUIDITY SAFETY CONVENIENCE INTEREST EARNING POTENTIAL EARLY WITHDRAW PENALTIES

CHAPTER TEN SAVING FOR YOUR FUTURE QUESTION: THE MOST IMPORTANT THING TO REMEMBER FROM THE CHAPTER ON SAVINGS IS TO DO WHAT? ANSWER: PAY YOURSELF FIRST!

CHAPTER TEN MANAGING YOUR INVESTMENTS QUESTION: Once you have a “safe cushion” put away in regular savings, you can start doing more serious investing. What does the book consider a “safe cushion”? ANSWER: 3-6 MONTHS OF EXPENSES

CHAPTER TEN MANAGING YOUR INVESTMENTS QUESTION: A measure of uncertainty about an investment is known as? ANSWER: RISK

CHAPTER TEN MANAGING YOUR INVESTMENTS QUESTION: The rise in the general level of prices over time is known as __________________? ANSWER: INFLATION

CHAPTER TEN MANAGING YOUR INVESTMENTS QUESTION: In order to research possible investments you need to find solid financial information. Name three possible sources for this info: ANSWERS: NEWSPAPERS FINANCIAL MAGAZINES ANNUAL REPORTS ONLINE FINANCIAL WEBSITES

CHAPTER FOURTEEN MANAGING YOUR INVESTMENTS QUESTION: Represent ownership in a corporation. ANSWER: STOCKS

CHAPTER FOURTEEN MANAGING YOUR INVESTMENTS QUESTION: One unit of ownership is known as: ANSWER: A SHARE

CHAPTER TWELVE INVESTING IN STOCKS QUESTION: Stocks that are sold in multiples of 100 are called? ANSWER: ROUND LOTS

CHAPTER TWELVE INVESTING IN STOCKS QUESTION: A class of stock in which the owner of the stock shares directly in the success or failure of the business. Most stocks are of this type. ANSWER: COMMON STOCK

CHAPTER TWELVE INVESTING IN STOCKS QUESTION: Portion of the profits that are redistributed to the shareholders of a corporation. ANSWER: DIVIDENDS

CHAPTER TWELVE INVESTING IN STOCKS QUESTION: Type of stock where dividends are fixed and the owners of this stock gets paid first if the business goes down. This type of stock is much harder to find. ANSWER: PREFERRED STOCK

CHAPTER TWELVE INVESTING IN STOCKS QUESTION: Stocks that have a consistent history of paying high dividends are known as? ANSWER: INCOME STOCKS

CHAPTER TWELVE INVESTING IN STOCKS QUESTION: Companies that REINVEST their profits into the business so that they can grown and expand are known as ______________? ANSWER: GROWTH STOCKS

CHAPTER TWELVE INVESTING IN STOCKS QUESTION: When a stock sells for less than $5 per share it is called a ________________? ANSWER: PENNY STOCK

CHAPTER TWELVE INVESTING IN STOCKS QUESTION: Stocks of well-established, and usually profitable companies, are called __________________? ANSWER: BLUE-CHIP STOCKS

CHAPTER TWELVE INVESTING IN STOCKS QUESTION: A stock that remains stable even when the economy is bad is known as a _________________________? ANSWER: DEFENSIVE STOCK

CHAPTER TWELVE INVESTING IN STOCKS QUESTION: _____________________ reflects the price that investors are willing to pay for a share of stock at that moment. ANSWER: MARKET VALUE

CHAPTER TWELVE INVESTING IN STOCKS QUESTION: What are the two ways you can make money with stocks? ANSWER: THE STOCK PRICE CAN GO UP YOU CAN GET A DIVIDEND

CHAPTER TWELVE INVESTING IN STOCKS QUESTION: How much money you make on an investment is known as? ANSWER: THE RETURN ON INVESTMENT (ROI)

CHAPTER TWELVE INVESTING IN STOCKS QUESTION: A marketplace where stocks and other securities are bought and sold is called what? ANSWER: A SECURITIES EXCHANGE

CHAPTER TWELVE INVESTING IN STOCKS QUESTION: The largest organized exchange in the United States is? ANSWER: THE NEW YORK STOCK EXCHANGE

CHAPTER TWELVE INVESTING IN STOCKS QUESTION: When brokers are used to buy and sell stocks, BUT THERE IS NO EXCHANGE, the transaction is? ANSWER: OVER-THE-COUNTER (OTC)

CHAPTER TWELVE INVESTING IN STOCKS QUESTION: What is the largest OTC Market in the U.S.? ANSWER: THE NASDAQ

CHAPTER TWELVE INVESTING IN STOCKS QUESTION: Strategy you use if you think a stock price is going to drop? ANSWER: SHORTING A STOCK OR SELLING SHORT

CHAPTER TWELVE INVESTING IN STOCKS QUESTION: Occurs when a company increases the number of shares they have outstanding, but lowers the selling price of the stock in direct proportion. ANSWER: STOCK SPLIT

CHAPTER THIRTEEN MUTUAL FUNDS & REAL ESTATE QUESTION: Type of investment where investors from around the world pool their money together to buy stocks, bonds, and other securities. ANSWER: MUTUAL FUND

CHAPTER THIRTEEN MUTUAL FUNDS & REAL ESTATE QUESTION: What are three reasons why people invest in mutual funds? ANSWER: Convenient Provides Diversification High Liquidity Usually less risky than the stock market

CHAPTER THIRTEEN MUTUAL FUNDS & REAL ESTATE QUESTION: Type of mutual fund that invests in companies that are still growing. ANSWER: GROWTH FUND

CHAPTER THIRTEEN MUTUAL FUNDS & REAL ESTATE QUESTION: Type of fund that invests in companies that pay consistently good dividends. ANSWER: INCOME FUND

CHAPTER THIRTEEN MUTUAL FUNDS & REAL ESTATE QUESTION: Type of fund that invests in a mixture of stocks and bonds. The purpose is to reduce risk while maintaining both income and growth. ANSWER: BALANCED (or MIXED EQUITY) FUND

CHAPTER THIRTEEN MUTUAL FUNDS & REAL ESTATE QUESTION: Type of fund that holds stocks or bonds that react the same as the stock or bond markets as a whole do. ANSWER: INDEX FUND

CHAPTER THIRTEEN MUTUAL FUNDS & REAL ESTATE QUESTION: Type of fund that invests in short-term corporate and government bonds. Considered to be the most safe – but generally speaking pay the lowest interest rates. ANSWER: MONEY MARKET FUND

CHAPTER THIRTEEN MUTUAL FUNDS & REAL ESTATE QUESTION: What type of investment has historically proven to give the best returns and give you the best defense against inflation? ANSWER: REAL ESTATE

CHAPTER THIRTEEN MUTUAL FUNDS & REAL ESTATE QUESTION: When buying real estate you usually have to pay some money up front in order to secure the loan. This is known as what? ANSWER: A DOWN PAYMENT

CHAPTER THIRTEEN MUTUAL FUNDS & REAL ESTATE QUESTION: Down Payments usually have to be at least how much? ANSWER: 20% OF THE TOTAL PRICE

CHAPTER THIRTEEN MUTUAL FUNDS & REAL ESTATE QUESTION: The difference between what you can sell the house for and what you owe on is it is referred to as what? ANSWER: EQUITY

CHAPTER THIRTEEN MUTUAL FUNDS & REAL ESTATE QUESTION: What are two HUGE benefits to investing in real estate? ANSWER: EXCELLENT RETURN ON INVESTMENT GREAT TAX BENEFITS

CHAPTER THIRTEEN MUTUAL FUNDS & REAL ESTATE QUESTION: What is the biggest con of investing in real-estate? ANSWER: LOW LIQUIDITY – IT CAN BE HARD TO CONVERT YOUR INVESTMENT BACK INTO CASH

MATH PROBLEMS Be able to: Compute return on investment Figure out dividend calculations Perform compounding interest calculations It will help if you have a calculator with you for the test tomorrow! 

STUDY, STUDY, STUDY GOOD LUCK!