Reference no: EM132247905
Multiple Choice Test Questions
1. How much money would you have to invest today, at an interest rate of 5% in order to reach your goal of $1,000,000 in 30 years? Assume no additional money is invested.
$123,737.45
$321,377.45
$231,377.45
$132,733.45
2. What annual investment amount must be invested every year in order to reach a goal of $1,000,000 in 30 years at an interest rate of 5%? (assume no upfront investment PV=0)
$15,051.44
$231,377.45
$1,000,000
$33,333.33
3. The two bank websites I researched showed that their annual savings account interest rates are ______. This is because _____.
high...they are risky investments
low...they are nearly risk-free
low...the government (specifically Congress) keeps them low
high...the supply of ATM machines is too low
4. What one-time investment amount must be invested today, at a higher interest rate of 7.17% in order to reach a goal of $1,000,000 in 30 years?
$1,000,000
$71,700
$152,257.13
$125,257.31
5. The interest rates on savings accounts is ____ the interest rate (rate of return) on riskier investments such as stocks & stock funds.
the same as (they are determined by central bank)
lower than
higher than
6. Savings account interest rates at the bank are products just like groceries are at the grocery store. Just as we make economic decisions with our food buys...
we should always accept the savings rate at the nearest bank
we should shop around for (or at least consider) the highest savings rate possible.
7. If you want to reach a long-term investment (savings) goal, a good strategy to consider is...
saving money up-front and leaving it to grow over time.
saving money out of your income and placing it into an investment each year.
both of these
playing the lottery (show me the money! even my stacks got stacks)
8. TRUE OR FALSE: If you want to become a millionaire in 30 years, a savings account is the best investment to choose.
True
False
9. TRUE OR FALSE: If you want to become a millionaire in 30 years, the time value of money formulas that businesses use will help you estimate how much money to invest.
True
False
10. If you want to become a millionaire in 30 years...
the longer you wait to start investing, the bigger the payout is.
the earlier you invest, the better your odds will be of reaching this goal.
11. If you want to become a millionaire in 30 years...
stocks and/or mutual funds could get you there faster.
a savings account is the best choice.
12. Which of the following dynamics of investing / creating wealth is TRUE?
the higher the interest rate / return on your investment, the larger the amount of money you need to invest in order to reach your goal.
the higher the interest rate / return on your investment, the smaller the amount of money you need to invest in order to reach your goal.