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

MONEY MANAGEMENTMONEY MANAGEMENT

UNIT 4 – TEST REVIEWUNIT 4 – TEST REVIEWPLANNING FOR YOUR FUTUREPLANNING FOR YOUR FUTURE

SAVINGS AND INVESTINGSAVINGS AND INVESTING

CHAPTER TENCHAPTER TENSAVING FOR YOUR FUTURESAVING FOR YOUR FUTURE

QUESTION: QUESTION:

– Financial security begins when you start doing what?Financial security begins when you start doing what?

ANSWER:

SAVING MONEY!


QUESTION: QUESTION:

– List three “expected” items that most people save money List three “expected” items that most people save money for?for?

ANSWER:

HOUSE, CAR, VACATIONS etc…


QUESTION: QUESTION: – You need to have some savings to take care of the You need to have some savings to take care of the

unexpected things that life throws at you. Name three unexpected things that life throws at you. Name three “unexpected” items that you might need your savings for:“unexpected” items that you might need your savings for:

ANSWER:

UNEMPLOYMENT, ACCIDENT, SICKNESS


QUESTION: QUESTION:

– The amount of money you have left after your bills is paid The amount of money you have left after your bills is paid is referred to as your ___________?is referred to as your ___________?

ANSWER:

DISCRETIONARY INCOME


QUESTION: QUESTION:

– The amount of money deposited into your savings account The amount of money deposited into your savings account is known as the __________?is known as the __________?

ANSWER:

PRINCIPAL


QUESTION: QUESTION:

– Money paid by the financial institution to the save for the Money paid by the financial institution to the save for the use of their money is known as what?use of their money is known as what?

ANSWER:

INTEREST


QUESTION: QUESTION:

– When interest is computed on the original principal plus When interest is computed on the original principal plus accumulated interest, it is called what?accumulated interest, it is called what?

ANSWER:

COMPOUNDING INTEREST


QUESTION: QUESTION:

– In class we discussed a few ways people “save” their In class we discussed a few ways people “save” their money. Name one:money. Name one:

ANSWERS: REGULAR SAVINGS ACCOUNT CERTIFICATE OF DEPOSIT MONEY MARKET FUND


QUESTION: QUESTION:

– When assets can be easily converted into cash without a When assets can be easily converted into cash without a loss in value they are called what?loss in value they are called what?

ANSWER:

LIQUID


QUESTION: QUESTION:

– Name a “pro” and a “con” about putting money into a Name a “pro” and a “con” about putting money into a regular savings account?regular savings account?

ANSWER: PRO: HIGH LIQUIDITY CON: LOW INTEREST RATE


QUESTION: QUESTION: – In class we discussed five factors that you should In class we discussed five factors that you should

consider when setting up your savings. Can you name consider when setting up your savings. Can you name any of them?any of them?

ANSWERS: LIQUIDITY SAFETY CONVENIENCE INTEREST EARNING POTENTIAL EARLY WITHDRAW PENALTIES


QUESTION: QUESTION:

– THE MOST IMPORTANT THING TO REMEMBER FROM THE THE MOST IMPORTANT THING TO REMEMBER FROM THE CHAPTER ON SAVINGS IS TO DO WHAT?CHAPTER ON SAVINGS IS TO DO WHAT?

ANSWER:

PAY YOURSELF FIRST!

CHAPTER TENCHAPTER TENMANAGING YOUR INVESTMENTSMANAGING YOUR INVESTMENTS

QUESTION: QUESTION:

– Once you have a “safe cushion” put away in regular savings, you can 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 start doing more serious investing. What does the book consider a “safe cushion”?cushion”?

ANSWER:

3-6 MONTHS OF EXPENSES

CHAPTER TEN CHAPTER TEN MANAGING YOUR INVESTMENTSMANAGING YOUR INVESTMENTS

QUESTION: QUESTION:

– A measure of uncertainty about an investment is known as?A measure of uncertainty about an investment is known as?

ANSWER:

RISK


QUESTION: QUESTION:

– The rise in the general level of prices over time is known as The rise in the general level of prices over time is known as __________________?__________________?

ANSWER:

INFLATION


QUESTION: QUESTION: – In order to research possible investments you need to In order to research possible investments you need to

find solid financial information. Name three possible find solid financial information. Name three possible sources for this info:sources for this info:

ANSWERS: NEWSPAPERS FINANCIAL MAGAZINES ANNUAL REPORTS ONLINE FINANCIAL WEBSITES

CHAPTER FOURTEENCHAPTER FOURTEENMANAGING YOUR INVESTMENTSMANAGING YOUR INVESTMENTS

QUESTION: QUESTION:

– Represent ownership in a corporation.Represent ownership in a corporation.

ANSWER:

STOCKS

CHAPTER FOURTEENCHAPTER FOURTEENMANAGING YOUR INVESTMENTSMANAGING YOUR INVESTMENTS

QUESTION: QUESTION:

– One unit of ownership is known as:One unit of ownership is known as:

ANSWER:

A SHARE

CHAPTER TWELVE CHAPTER TWELVE INVESTING IN STOCKSINVESTING IN STOCKS

QUESTION: QUESTION:

– Stocks that are sold in multiples of 100 are called?Stocks that are sold in multiples of 100 are called?

ANSWER:

ROUND LOTS


QUESTION: QUESTION:

– A class of stock in which the owner of the stock shares directly in 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.the success or failure of the business. Most stocks are of this type.

ANSWER:

COMMON STOCK


QUESTION: QUESTION:

– Portion of the profits that are redistributed to the Portion of the profits that are redistributed to the shareholders of a corporation.shareholders of a corporation.

ANSWER:

DIVIDENDS


QUESTION: QUESTION:

– Type of stock where dividends are fixed and the owners of this stock gets 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 paid first if the business goes down. This type of stock is much harder to find.find.

ANSWER:

PREFERRED STOCK


QUESTION: QUESTION:

– Stocks that have a consistent history of paying high dividends Stocks that have a consistent history of paying high dividends are known as?are known as?

ANSWER:

INCOME STOCKS


QUESTION: QUESTION:

– Companies that REINVEST their profits into the business so that Companies that REINVEST their profits into the business so that they can grown and expand are known as ______________?they can grown and expand are known as ______________?

ANSWER:

GROWTH STOCKS


QUESTION: QUESTION:

– When a stock sells for less than $5 per share it is called a When a stock sells for less than $5 per share it is called a ________________?________________?

ANSWER:

PENNY STOCK


QUESTION: QUESTION:

– Stocks of well-established, and usually profitable companies, Stocks of well-established, and usually profitable companies, are called __________________?are called __________________?

ANSWER:

BLUE-CHIP STOCKS


QUESTION: QUESTION:

– A stock that remains stable even when the economy is bad is A stock that remains stable even when the economy is bad is known as a _________________________?known as a _________________________?

ANSWER:

DEFENSIVE STOCK


QUESTION: QUESTION:

– _____________________ reflects the price that investors are _____________________ reflects the price that investors are willing to pay for a share of stock at that moment.willing to pay for a share of stock at that moment.

ANSWER:

MARKET VALUE


QUESTION: QUESTION:

– What are the two ways you can make money with stocks?What are the two ways you can make money with stocks?

ANSWER: THE STOCK PRICE CAN GO UP YOU CAN GET A DIVIDEND


QUESTION: QUESTION:

– How much money you make on an investment is known as?How much money you make on an investment is known as?

ANSWER:

THE RETURN ON INVESTMENT (ROI)


QUESTION: QUESTION:

– A marketplace where stocks and other securities are bought A marketplace where stocks and other securities are bought and sold is called what?and sold is called what?

ANSWER:

A SECURITIES EXCHANGE


QUESTION: QUESTION:

– The largest organized exchange in the United States is?The largest organized exchange in the United States is?

ANSWER:

THE NEW YORK STOCK EXCHANGE


QUESTION: QUESTION:

– When brokers are used to buy and sell stocks, BUT THERE IS When brokers are used to buy and sell stocks, BUT THERE IS NO EXCHANGE, the transaction is?NO EXCHANGE, the transaction is?

ANSWER:

OVER-THE-COUNTER (OTC)


QUESTION: QUESTION:

– What is the largest OTC Market in the U.S.?What is the largest OTC Market in the U.S.?

ANSWER:

THE NASDAQ


QUESTION: QUESTION:

– Strategy you use if you think a stock price is going to drop?Strategy you use if you think a stock price is going to drop?

ANSWER:

SHORTING A STOCK OR SELLING SHORT


QUESTION: QUESTION:

– Occurs when a company increases the number of shares they have Occurs when a company increases the number of shares they have outstanding, but lowers the selling price of the stock in direct proportion.outstanding, but lowers the selling price of the stock in direct proportion.

ANSWER:

STOCK SPLIT

CHAPTER THIRTEENCHAPTER THIRTEENMUTUAL FUNDS & REAL ESTATEMUTUAL FUNDS & REAL ESTATE

QUESTION: QUESTION:

– Type of investment where investors from around the world pool Type of investment where investors from around the world pool their money together to buy stocks, bonds, and other securities.their money together to buy stocks, bonds, and other securities.

ANSWER:

MUTUAL FUND


QUESTION: QUESTION: – What are three reasons why people invest in What are three reasons why people invest in

mutual funds?mutual funds?

ANSWER: Convenient Provides Diversification High Liquidity Usually less risky than the stock

market


QUESTION: QUESTION:

– Type of mutual fund that invests in companies that are still Type of mutual fund that invests in companies that are still growing.growing.

ANSWER:

GROWTH FUND


QUESTION: QUESTION:

– Type of fund that invests in companies that pay consistently Type of fund that invests in companies that pay consistently good dividends.good dividends.

ANSWER:

INCOME FUND


QUESTION: QUESTION:

– Type of fund that invests in a mixture of stocks and bonds. The Type of fund that invests in a mixture of stocks and bonds. The purpose is to reduce risk while maintaining both income and growth.purpose is to reduce risk while maintaining both income and growth.

ANSWER:

BALANCED (or MIXED EQUITY) FUND


QUESTION: QUESTION:

– Type of fund that holds stocks or bonds that react the same Type of fund that holds stocks or bonds that react the same as the stock or bond markets as a whole do.as the stock or bond markets as a whole do.

ANSWER:

INDEX FUND


QUESTION: QUESTION:

– Type of fund that invests in short-term corporate and government Type of fund that invests in short-term corporate and government bonds. Considered to be the most safe – but generally speaking pay the bonds. Considered to be the most safe – but generally speaking pay the lowest interest rates.lowest interest rates.

ANSWER:

MONEY MARKET FUND


QUESTION: QUESTION:

– What type of investment has historically proven to give the What type of investment has historically proven to give the best returns and give you the best defense against inflation?best returns and give you the best defense against inflation?

ANSWER:

REAL ESTATE


QUESTION: QUESTION:

– When buying real estate you usually have to pay some money When buying real estate you usually have to pay some money up front in order to secure the loan. This is known as what?up front in order to secure the loan. This is known as what?

ANSWER:

A DOWN PAYMENT


QUESTION: QUESTION:

– Down Payments usually have to be at least how much?Down Payments usually have to be at least how much?

ANSWER:

20% OF THE TOTAL PRICE


QUESTION: QUESTION:

– The difference between what you can sell the house for and The difference between what you can sell the house for and what you owe on is it is referred to as what?what you owe on is it is referred to as what?

ANSWER:

EQUITY


QUESTION: QUESTION:

– What are two HUGE benefits to investing in real estate?What are two HUGE benefits to investing in real estate?

ANSWER: EXCELLENT RETURN ON

INVESTMENT GREAT TAX BENEFITS


QUESTION: QUESTION:

– What is the biggest con of investing in real-estate?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 PROBLEMSMATH PROBLEMS

Be able to:Be able to:– Compute return on investmentCompute return on investment– Figure out dividend calculationsFigure out dividend calculations– Perform compounding interest Perform compounding interest

calculationscalculations It will help if you have a calculator It will help if you have a calculator

with you for the test tomorrow! with you for the test tomorrow!

STUDY, STUDY, STUDYSTUDY, STUDY, STUDY

GOOD LUCK!GOOD LUCK!

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

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