Principles of Saving and Investing Quiz

Government bonds are generally considered safe due to the backing of the government.

Savings accounts are not typically considered investment accounts.

Emergency funds provide a financial safety net for unexpected expenses.

401(k) accounts help individuals save for retirement through employer-sponsored plans.

Interest earned is a return on investment, not an expense associated with investing.

Diversification helps spread risk by investing in a variety of assets.

CDs offer a fixed interest rate for a specified period.

ROI measures the return on an investment relative to its cost.

Compounding involves earning interest on the initial investment and its earnings over time.

Liquidity is generally seen as a positive factor and is not a risk indicator.

Derivatives often involve complex financial instruments and carry higher risk.