Savings Options and Investment Risks Quick Check
1 of 51 of 5 Items
Question
Which option describes a bank savings account?(1 point)
Responses
An account giving 0.05% interest with no other limitations
A deposit that has to be maintained in the bank for 1 year in exchange of a 2% interest.
A “basket” of money pooled in by many investors to acquire securities based on the value of cash.
An investment in stocks.
An account giving 0.05% interest with no other limitations
Which of the following is a certificate of deposit (CD)?(1 point)
Responses
An account paying 0.5% interest with no other limitations.
A deposit that has to be maintained in the bank for 1 year in exchange of a 2% interest.
A “basket” of money pooled in by many investors to acquire securities based on the value of cash.
An investment in stocks.
A deposit that has to be maintained in the bank for 1 year in exchange of a 2% interest.
Which of the following is classified as a money market mutual fund?(1 point)
Responses
An account giving 0.5% interest with no other limitations.
An account giving 0.5% interest with no other limitations.
A deposit that has to be maintained in the bank for 1 year in exchange of a 2% interest.
A deposit that has to be maintained in the bank for 1 year in exchange of a 2% interest.
A “basket” of money pooled in by many investors to acquire securities based on the value of cash.
A “basket” of money pooled in by many investors to acquire securities based on the value of cash.
An investment in stocks.
A “basket” of money pooled in by many investors to acquire securities based on the value of cash.
What does the abbreviation ROI stand for?(1 point)
Responses
ratio of investment
ratio of investment
return on internal loan
return on internal loan
return on investment
return on investment
ratio of organic investment
return on investment
Which of the following is the safest investment?(1 point)
Responses
stocks
stocks
government bonds
government bonds
mutual funds
mutual funds
cryptocurrencies
government bonds
To determine which option describes a bank savings account, let's examine each response:
1. An account giving 0.05% interest with no other limitations: This option does describe a bank savings account. In a savings account, your deposited funds earn interest, which is typically lower than the interest rates associated with other investment options. This option specifies a 0.05% interest rate, indicating that it aligns with a typical savings account offering.
2. A deposit that has to be maintained in the bank for 1 year in exchange for a 2% interest: This option describes a fixed deposit or certificate of deposit (CD), not a traditional savings account. With a fixed deposit, you agree to keep the money deposited in the bank for a specific duration, such as 1 year, and in return, you receive a higher interest rate. While both savings accounts and fixed deposits are offered by banks, they have different terms and interest rates.
3. A “basket” of money pooled in by many investors to acquire securities based on the value of cash: This option describes a mutual fund, not a bank savings account. Mutual funds are investment vehicles that pool money from multiple investors to invest in a diversified portfolio of securities. They are typically managed by professional portfolio managers and provide access to a broader range of investment options than a savings account.
4. An investment in stocks: This option describes investing directly in individual stocks, which is not the same as a bank savings account. Stocks represent ownership in a specific company, and their value fluctuates based on market conditions and the performance of the issuing company. Investing in stocks carries higher risks and potential rewards compared to a savings account.
Therefore, the option that best describes a bank savings account is "An account giving 0.05% interest with no other limitations."