Saving for retirement can be tough, to say the least. But if you think your nest egg is well-feathered, then this quiz shouldn't be a problem.
Which of the following terms describes the interest due on a bond since the last interest payment was made?
Bondholders usually pay interest every six months. However, the interest that the bondholder accrues is on a day-to-day basis. When the bondholder sells the bond, the buyer pays the seller the market price plus the accrued interest.
Which term below describes a declining stock market?
Bear markets are those that are in decline or have investors that are generally pessimistic and believe investments will fall. Bull markets are when stocks are increasing and investors are making money.
Which term or word best describes a company known for its ability to make money?
Blue chip companies are usually large, national firms with a solid record of earnings. Blue chip stocks are generally worth more than other stocks.
The stock of which of these companies is not considered a blue chip?
Disney, Microsoft and Walmart are ell-known companies and their stock is very expensive. Left Behind Games produces software for a niche market. In mid-January 2011 its stock was trading for less than $1.
What is an annuity?
Annuities are a series of payments made periodically for a specific period. Insurance companies sell annuities that provide payments at specific intervals, usually during retirement.
Which of the following is considered a bad credit score?
The chances of you buying that new BMW with a 520 credit score are slim and none.
What is the profit from the sale of a capital asset called?
Whenever you sell something like a stock or a home in which you reap a profit, you are earning capital gains. You are required to pay capital gains taxes on most profits.
In the financial world, what do the letters "CD" stand for?
There are two basic types of CDs, or Certificates of Deposit -- traditional and negotiable. CDs have a maturity date and an interest rate.
Which of the following is the correct term to describe the act of spreading investments among different types of securities and companies?
A diversified portfolio includes a variety of investments including of stocks, bonds and mutual funds.
Which of the following is more likely to depreciate over time?
Property is a better investment than motor vehicles because property will gain in value over the long haul. However, many people invest in classic cars.
Which is the correct term that describes a corporation that owns the securities of another company?
Holding companies own enough stock in other firms to control management and operations of those firms.
Which of the following best describes a company or trust that uses its capital to invest in other companies?
Investment companies pool the funds of investors and use that money to buy various securities.
What is the name for a company plan that allows employees to set aside tax-deferred income for retirement?
Congress named the 401(k) plan, which allows employees to contribute to their retirement tax free, for a specific section of the Internal Revenue Service Code.
Why are Individual Retirement Accounts so appealing?
IRAs give investors a huge tax benefit. Some IRAs defer taxes until investors withdraw the money.
What's the main difference between a Roth IRA and a regular IRA?
Those that have a Roth IRA will save oodles of cash because they pay taxes on their contributions, not on their withdrawals.
Which is the best definition of a mutual fund?
Mutual funds are easy and inexpensive ways to diversify investments because they combine the money of small investors to buy stocks, bonds and other types of securities.
What's a "penny stock?"
Most penny stocks -- those that trade for less than $1 -- have less than $1 million in assets.
What is the arrangement in which a homeowner borrows against the equity in his or her home and receives regular monthly payments from the lender?
A reverse mortgage allows a homeowner to receive tax-free, monthly payments based on the equity in their home.
What is one way to avoid a penalty for using money in your 401(k) too early?
You won't be taxed or penalized for borrowing against your 401(k), however, you will need to pay the money back. If you simply withdraw the money before you retire, you will take a financial hit.
What do you call a person who is willing to risk a lot of money in the hope of a higher gain?
Speculators try to predict the future in the hopes of making fast money.
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