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- 1. Multiple Choice
A key difference between saving and investing is
Saving is for everyone, investing is for the wealthy
Your money is insured when investing, it is not in savings
Investing has a guaranteed return, savings does not
Saving is for emergencies & goals, investing is for long-term wealth
- 2. Multiple Choice
Why is compound interest more beneficial than simple interest?
Your money grows faster when it is compounded
Your taxed on simple interest, but not compound interest
Fees for compound interest are greater than simple interest
Compound interest is hard to calculate, so fewer use it
- 3. Multiple Choice
Which would be considered the highest risk investment type?
Stock
Mutual Fund
Bond
Money Market Account
- 4. Multiple Choice
The relationship between risk and return can be stated as
Higher risk indicates higher return
Higher risk indicates lower return
Lower risk indicates higher return
No relationship exists between risk and return
- 5. Multiple Choice
If Jonathan is earning 2% on an investment and inflation is increasing by 3%, what is happening to his purchasing power?
It's increasing
It's decreasing
It's not changing
Inflation and purchasing power are not related
- 6. Multiple Choice
How can you make money on stocks?
Buy them when the price is high and sell when the price is low
Interest
Dividends
Holding the stock at least 3 years
- 7. Multiple Choice
If interest rates rise, what will typically happen to bond prices?
Rise
Fall
Stay the same
Interest Rates are not related to bond prices
- 8. Multiple Choice
A _____ is a loan given to an organization while a _______ is partial ownership in the company.
bond, ETF
stock, bond
bond, stock
ETF, bond
- 9. Multiple Choice
What's the main difference between a Roth IRA and a Traditional IRA?
Roth IRAs have higher interest rates
Roth IRAs have you pay taxes upfront
Roth IRAs have higher fees
Roth IRAs are riskier investments
- 10. Multiple Choice
Andy bought 5 shares of a company for $10. Later, he sold all 5 shares for $15. What was his profit/loss on the stock?
Profit of $5
Loss of $5
Profit of $25
Loss of $25
- 11. Multiple Choice
This is a characteristic human investment managers have that robo-advisors do not
Options trading
Personal touch
Futures trading
Beating the market
- 12. Multiple Choice
What is the main appeal of an index fund?
They are always actively managed to add a human touch
They are typically low cost and diversified investments
They are always managed by a robo-advisor to remove human bias
They give you partial ownership of a single company
- 13. Multiple Choice
An account that is used to buy and sell stocks, bonds, and funds is called a
Roth IRA
ETC Account
Brokerage Account
Target Date Fund
- 14. Multiple Choice
A diversified portfolio is desirable because
It limits investment choice
It's a good predictor on rate of return
It increases risk and return
It decreases risk
- 15. Multiple Choice
What is the benefit of a target date fund (TDF)?
TDFs come with lower fees
TDFs adjust assets allocation automatically based on retirement year
TDFs are insured against loss for the first 5 years
TDFs guarantee a certain rate of return by the target date
- 16. Multiple Choice
Putting regular amounts of money into an investment account at specific time intervals is
Compound interest
Diversification
Dollar cost averaging
Inflation
- 17. Multiple Choice
Which is NOT a good reason to buy a stock fund like the S&P 500?
Have a diversified portfolio
Have an investment with low fees
Don't have to monitor as closely as an actively managed account
You want to "beat the market" with your ROI
- 18. Multiple Choice
What is Social Security?
Social Security is a private retirement fund run by your company
Social Security is another name for a 401(k)
Social Security is a government run retirement program
Social Security is a program that matches your 401(k) contributions
- 19. Multiple Choice
Why is it important to start investing as soon as possible?
You take less risk when you are young, so money will be safe
You have more time for your money to compound
Investing is an easy way to make quick money
Fees on investments are cheaper when you are younger
- 20. Multiple Choice
How is a bond fund different from an individual bond?
A bond fund is a group of bonds and is considered more diversified
A bond fund always gives you a higher interest rate than an individual bond
A bond is issued by the government. A bond fund is issued by a company.
A bond fund can't be sold but an individual bond can
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