Money Masters

Teaching kids to manage money

Answers and explanations:

  1. Why do your interests matter when investing in the stock market?
    Answer: b. When you're interested in something, you usually know more about it.
    Explanation: There are many strategies you can use to invest successfully. One of them is to invest in companies you understand and believe in.
  2. What is a stock market?
    Answer: d. All of the above
    Explanation: Stock markets are places where financial information is exchanged, where stock prices are determined by supply and demand, and where stocks are bought and sold.
  3. What is the second step of the consumer decision-making process?
    Answer: b. Gather the information.
    Explanation: After determining what the problem is, the next step is to gather all the important information. Only then can effective decision-making take place.
  4. What is the best way to improve your income if you have few job skills?
    Answer: b. Get more training/education.
    Explanation: If you have few job skills, you probably won't be able to get a better job until you have more skills. Decreasing your productivity means you get less work done in the same amount of time. That won't improve your income. Therefore, the correct answer is to get more training/education to improve your job skills. More skills will lead to a higher income.
  5. Which of the following is a consequence of spending more than you earn?
    Answer: b. You jeopardize your long-term financial goals.
    Explanation: When you spend more than you earn, you go into debt and have a hard time paying your bills. That jeopardizes your long-term financial goals.
  6. In addition to earning an income, an advantage to being an entrepreneur is
    Answer: b. Being one's own boss
    Explanation: All of the answers are true, but the only one most people would consider an advantage of being an entrepreneur is the ability to be one's own boss.
  7. After you write a check you should
    Answer: b. Record the transaction in your check register as soon as you can.
    Explanation: It's important to keep accurate records when you have a checking account. That way you avoid overdrawing your account (spending more money in debit card withdrawals or checks written than you have in the account) and paying extra fees to the bank. Then when you receive your monthly statement you can check it to make sure the bank didn't make any mistakes.
  8. Which of the following is true of debit cards?
    Answer: b. You aren't borrowing money when you use them.
    Explanation: Using a debit card is like writing a check. The money is withdrawn from your checking account when you use the debit card. It is different than a credit card, which is a short-term loan to you from the credit card company.
  9. What is compound interest?
    Answer: a. Interest paid on both the principal and any accumulated interest.
    Explanation: Compound interest is interest paid on both the principal and any accumulated interest. That is one reason why there is such a big difference in accumulated wealth for people who begin saving at a young age versus people who wait until they are older.
  10. A market order is placed for a stock when the stock's bid price is $15.00 and the ask price is $15.25. At what price per share will the market order most likely be filled?
    Answer: c. $15.12
    Explanation: A market order is an order to buy or sell a stock immediately upon receipt. Since someone is willing to buy the stock (the bid price) at $15.00 and someone else is willing to sell the stock (the ask price) at $15.25, the market order will most likely be filled in-between at $15.12.