Understanding Savings and Investments
A Grade 12 math worksheet focusing on financial literacy topics related to saving money, compound interest, and investment strategies.
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Understanding Savings and Investments
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Date:
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Read each question carefully and provide your best answer. Show all your work for calculations.
1. Which of the following best describes the concept of compound interest?
Interest earned only on the initial principal.
Interest earned on the principal and on accumulated interest.
Interest paid annually, regardless of the interest rate.
A fixed amount of money paid to a bank for a loan.
2. What is the primary purpose of an emergency fund?
To purchase luxury items.
To cover unexpected expenses.
To invest in high-risk stocks.
To pay off long-term debt.
3. The Rule of 72 is used to estimate the number of years it takes for an investment to .
4. A account typically offers higher interest rates than a regular savings account but may have withdrawal restrictions.
5. Explain the difference between saving and investing.
6. Calculate the future value of an investment of $5,000 at an annual interest rate of 4% compounded annually for 10 years. Show your work.
7. Diversification is a strategy to reduce risk in an investment portfolio.
True
False
8. Inflation decreases the purchasing power of money over time.
True
False
Match each term with its definition.
9. Portfolio
a. The amount of money earned on an investment.
10. Return on Investment (ROI)
b. A collection of diverse financial assets.
11. Liquidity
c. The ease with which an asset can be converted into cash.
12. Plot the growth of an investment of $1,000 at a 5% annual interest rate compounded annually over 5 years. Label your axes.
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