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1.
The longer an investment is allowed to compound interest, the higher its return will be.
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.
2.
Reinvesting your dividends helps you compound your earnings because it _______.
Builds your investment base. The larger your investment base, the more there is to compound.
3.
A tax-sheltered account always protects your investment interest from taxes, even when you withdraw from it.
False. A tax-sheltered account lets interest grow within your account without taxes until it is withdrawn. Once it is withdrawn, it may be taxed.
4.
To find out the rate of interest that you would need to double your investment in a certain number of years, _______.
Divide 72 by the number of years. To find out the rate of interest you will need to double your investment in a certain amount of years, divide 72 by the number of years.
5.
By investing often while you earn compound interest, you can increase your total return. This is possible because frequent investing increases your _______.
Principal. Frequent investing adds to the size of your principal, thus magnifying your return.