International Baccalaureate (IB) Practice Exam

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Prepare for the International Baccalaureate Exam with comprehensive quizzes including multiple choice questions and detailed explanations to boost your confidence. Hone your skills with our expertly crafted materials!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

The saving habits of Ben and Arthur best illustrate which principle of saving?

Rate of return matters.
The amount of the initial investment is the key.
The length of time money is invested matters.
Both A and C

The correct answer is: Both A and C

The correct answer highlights two key concepts essential to understanding the principles of saving: the rate of return and the length of time money is invested. When saving or investing money, the rate of return refers to the percentage of interest or profit earned on the initial investment over a specific period. A higher rate of return generally leads to more money accumulated over time. Additionally, the length of time money is invested plays a crucial role due to the power of compound interest, where earnings on an investment start to generate their own earnings over time. The longer the money remains invested, the more profound the effect of compounding becomes. Ben and Arthur's saving habits exemplify how both these factors intertwine to influence the growth of their savings. If one individual prioritizes consistent, long-term investments while benefiting from higher rates of return, their savings will grow at an accelerated rate compared to someone who either invests for a shorter duration or with lower rates of return. Understanding these two principles helps individuals make more informed decisions about their savings and investments, maximizing the potential for financial growth over time.