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Stocks 102: Make Compound Interest Work for You

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1.
Interest paid on savings accounts and bonds is generally taxable.
Choose wisely. There is only one correct answer.
True. Interest paid on savings accounts and bonds is generally taxable.
2.
Reinvesting your dividends helps you compound your earnings because it _______.
Choose wisely. There is only one correct answer.
Builds your investment base. The larger your investment base, the more there is to compound.
3.
The Rule of 72 states that if you divide 72 by a given interest rate, you will learn how many years it will take for an investment to double. How long would it take for an investment with an interest rate of 4% to double?
Choose wisely. There is only one correct answer.
18 years. Dividing 72 by 4 gives you 18.
4.
The longer an investment is allowed to compound interest, the higher its return will be.
Choose wisely. There is only one correct answer.
True. Although time wont affect the actual rate of return, the return itself will grow, and it will grow much larger than it would from simple interest.
5.
The _______ you invest your money, the _______ compounding can work for you.
Choose wisely. There is only one correct answer.
Earlier / More. Compounding expands your money greatly over time.