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200
Portfolios 208:
How to Invest for Short-Term Goals
Test your knowledge
Choose wisely. There is only one correct answer to each question.
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1.
Whats the biggest benefit to using a certificate of deposit (CD) to fund a short-term goal?
Choose wisely. There is only one correct answer.
CDs are insured
CDs always offer better interest rates than other short-term investments
The return on a CD is guaranteed
The return on a CD is guaranteed. A CDs return is predictable. Buy a 12-month CD promising X% rate and thats exactly what youll get.
2.
Certificates of deposit are not insured.
Choose wisely. There is only one correct answer.
True
False
False. Certificates of deposit are insured.
3.
What do bank-loan funds invest in?
Choose wisely. There is only one correct answer.
Bank loans taken on by corporations
Loans taken out by individuals
Government loans
Stocks
Bank loans taken on by corporations. The funds choose floating-rate bank loans.
4.
What is the average duration of a bond in an ultrashort bond fund?
Choose wisely. There is only one correct answer.
One year
Six months
One week
Two years
Six months. This is why they are called ultrashort.
5.
Bank-loan funds have very little interest-rate risk to worry about.
Choose wisely. There is only one correct answer.
True
False
True. Because they invest in floating-rate loans, bank-loan funds have very little interest-rate risk.
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DONE