The Direktbank AG is lowering its interest rate by 0.50 % effective immediately. Go back two spaces!

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Lucinda Long
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1 The Direktbank AG is lowering its interest rate by 0.50 % effective immediately. Go back two spaces!

2 The Direktbank AG is raising its interest rate by 0.50 % next Monday. Advance two spaces!

3 Your driving school has increased its fee for lessons by 5 Euros due to rising fuel prices. Go back three spaces!

4 The driving school in your neighbourhood has switched to fuel-efficient cars. The fee for lessons has gone down by 4 Euros. Advance two spaces!

5 Your bank is offering to increase the interest paid on deposits of up to 5,000 Euros by 1 % for students. Advance three spaces!

6 Your mutual fund is doing well. Last year it had a return of 15 %. Advance three spaces!

7 Your mutual fund lost 5 %. Go back three spaces!

8 The shares you recently bought have gone up by 30 % based on positive company news. Advance four spaces!

9 Stock market crash! Stock prices are falling worldwide. Go back four spaces!

10 Winter is coming, and consumption of electricity is rising. Stocks for regional electric suppliers are doing well. Luckily, you bought in earlier. Advance two spaces!

11 Your grandmother has deposited 500 Euros in your savings account. Advance two spaces!

12 The inflation rate is on the rise due to increases in commodity prices. Your bank will not be raising interest rates for checking accounts. Go back one space!

13 The largest German corporations have announced that they will be raising their dividends for the current year. Your mutual fund is on the rise. Advance two spaces!

14 Your fixed deposit account of 2,000 Euros will be paid out next week. Advance two spaces!

15 You have lost your passbook! Your bank charges a fee of 15 Euros to replace it. Go back two spaces!

16 Your laptop died unexpectedly. To buy a new one, you must transfer 700 Euros from your savings account to your checking account. Go back three spaces!

17 What organisation calculates the inflation rate? Federal Statistical Office of Germany.

18 How many goods and services are in the basket of commodities? Approximately 700 goods and services.

19 Crude oil prices are falling. How does this affect the inflation rate, if the remaining goods and services show no change in price? The inflation rate decreases.

20 Can the inflation rate be negative? Yes. When prices fall compared to the same month of the previous year, it is referred to as deflation.

21 Is the following statement true? When the inflation rate is higher than the return on investment, you can buy more goods and services. No, you cannot buy as many goods and services in this situation.

22 The opposite of inflation is? Deflation.

23 How high is the real interest rate if the inflation rate is 1.5 % and the interest rate on capital investment is 2.5 %? The real interest rate is 1 % (investment rate inflation rate).

24 Is it true that the interest rate increases as the duration of the fixed deposit increases? Yes, that s correct.

25 Is it true that you cannot access your money while it is in a fixed deposit account? Yes, that s correct.

26 Is it true that interest on a fixed deposit account is paid at the end of the term? No, the interest is paid annually.

27 Can a bank reduce the interest rate on a five-year fixed deposit account after the first two years? No, the interest rate remains the same throughout.

28 Are shares just as risky an investment as a fixed deposit account? No, shares are much riskier.

29 Does one receive interest or dividends on fixed deposit accounts? Interest.

30 Can you lose all your money in a fixed deposit account? No, banks take various measures to safeguard fixed deposit accounts. Additionally, fixed deposits are guaranteed by the government.

31 Can one overdraw a savings account? No, one can only withdraw as much money as there is in the account.

32 Can one use a savings account to pay regular bills? No, a savings account is not intended for payments.

33 Is the interest rate higher on a money market account or on a current account? The interest rate is higher on a money market account.

34 Can you pay for CDs or DVDs at an electronics store with a savings account? No, you can only deposit or withdraw money from your account.

35 Does a savings account have a fixed period? No.

36 Why do direct banks usually pay higher interest rates on money market accounts than retail banks? Direct banks do not maintain expensive offices and thus have a cost advantage.

37 You have 1,300 Euros in your money market account. Can you withdraw 1,500 Euros? No, you can only withdraw as much money as there is in your account.

38 Is it true that you can access the full amount in your money market account at any time? Yes, that s correct.

39 How are fixed deposit accounts, savings accounts and money market accounts protected? Banks take various measures to safeguard your funds. Additionally, bank deposits are guaranteed by the government.

40 Some direct banks credit the interest on your money market account monthly. Is this better for you? Yes, the interest credited is added to the principal; i.e., the interest continues to compound.

41 Shares of the biggest German corporations are considered highly liquid. Why? The shares can be bought and sold at any time without any difficulties.

42 What is the name for the annual return a corporation pays out? Dividend.

43 Are the following market conditions positive or negative? Low interest rates. Strong or reasonable levels of economic growth. Positive.

44 What is the term for the graphic representation of changes in stock price? Charts.

45 Deutsche Telekom pays out a high dividend every year. What would happen if the company were not to pay a dividend one year due to negative economic conditions? Its share price would fall.

46 Which company s share price gained more over the years 2001 to 2010: Nokia or Apple? Apple.

47 Is it true that you can never lose your entire capital when investing in shares? No. In the worst-case scenario, you could lose everything.

48 Can you access the capital invested in shares at any time? Yes, shares can be bought or sold anytime on the stock exchange.

49 The fund manager of the LBBW mutual fund in Germany wants to buy shares in Nokia. Can he do so? No, the fund manager may only buy German shares.

50 Why are mutual funds less risky than a single stock? A mutual fund covers several different stocks; thus, even if a single stock performs badly, the other stocks in the fund provide a buffering effect.

51 The fund manager Thomas Michal is confident about the prospects for a certain company, and would like to invest at least 50 % of the fund s capital in this company. Is this possible? No, it contradicts the basic idea of a mutual fund, which is to spread risk.

52 Can the fund manager of a biotechnology fund buy shares in the cellular phone company Nokia? No, he can only buy shares in the biotechnology industry.

53 Can a mutual fund committed to the principles of socially responsible investment make investments in the defense sector? No.

54 Can you sell your stake in a mutual fund at any time? Yes, you can sell your stake at any time, either on the stock exchange or via the investment management company.

55 What is another word for availability? Liquidity.

56 How is return on investment calculated? In Euros or as a percentage? As a percentage.

57 Your mutual fund grew by 5 % over the last six months. What is the annual return? The annual return is 10 %.

58 The opposite of a safe investment is a investment. Risky.

59 Is it true that rising profits at a corporation usually also lead to an increase in its stock price? Yes.

60 Why does a company s stock price sometimes not go up over the long term in spite of a rise in profits? Due to the influence of negative market conditions (rising interest rates, policies unfriendly to business, etc.).

61 When did Nokia s share price reach its highest levels to date (March 2011)? In 2000.

62 What is the annual yield of the following shares? Price on : 50 Euros Price on : 54 Euros Eight percent.

63 Which of the following capital investments could lose money (ignoring inflation)? Savings account Shares Fixed deposit accounts Mutual funds Shares and mutual funds.

64 What is occasionally referred to as the magic triangle of capital investment? The trade-off between safety, liquidity and profitability.

65 Is the phrase the more secure the investment, the higher the return true? False. The safer an investment, the lower the return.

66 Name the reason for the collapse of the U.S. real estate market in The reason was lax lending standards, especially when it came to making loans to subprime borrowers.

67 What stock would perform better in a hot summer: shares in an ice-cream manufacturer or in a raincoat manufacturer? The shares in the ice-cream manufacturer.

68 How are interest periods calculated for savings schemes such as fixed deposits, savings accounts or money market accounts? Interest is always calculated annually.

69 What country is Nokia from? Finland.

70 What country is Apple from? USA (California).

71 What is the most important German stock index called? DAX 30 Dow Jones Nikkei DAX 30.

Case Study Investments

Case Study Investments how should Christian invest his money? Case Study Investments Getting Started 16-year-old Christian Späth has saved a total of 5,000 Euros from the money he earned from his last