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- 1. Multiple Choice
When would it be a good idea to put your money in a savings account instead of investing it?
When you won’t need the money for a long time.
When you’re looking for a large return.
When you’re looking to maintain the value of your money with a little bit of growth.
None of the above
- 2. Multiple Choice
When would it be a good idea to invest your money instead of putting it in a savings account?
When you won’t need the money for a long time.
When you want to put your money somewhere safe.
When you’re looking to maintain the value of your money with a little bit of growth.
None of the above
- 3. Multiple Choice
Which of the following statements is FALSE?
Investing is best when you’re looking to maintain the value of your money with a little bit of growth.
You earn interest in a savings account and a return by investing in the stock market.
Putting your money in a savings account is best if you’ll need to withdraw the money in the near future.
Investing is riskier than putting your money in a savings account.
- 4. Multiple Choice
Why might an investor want to invest in the stock market?
Investing in the stock market is a guaranteed way to make money.
Investing in companies through the stock market offers a chance to share in their profits.
Investing in the stock market usually offers a higher return than interest earned on a savings account.
Both B and C
- 5. Multiple Choice
People invest in the stock market because:
The time value of money states that money available now is worth more than the same amount of money later because of its potential to grow.
Investing in companies through the stock market offers a chance to share in the profits of those companies.
Investing in the stock market generally offers a higher return than interest earned on a savings account.
All of the above
- 6. Multiple Choice
Which of the following is NOT a reason why people invest in the stock market?
Investing in the stock market usually offers a higher return than the interest earned on a savings account.
Investing is a guaranteed way to make money.
Investing in companies through the stock market offers a chance to share in the profits of those companies.
None of the above
- 7. Multiple Choice
Historically, long-term returns of the stock market have been negative.
True
False
- 8. Multiple Choice
Historically, long-term returns of the stock market have been positive.
True
False
- 9. Multiple Choice
In the past 90 years, the stock market has had positive returns, averaging 10% annually.
True
False
- 10. Multiple Choice
A ______ is a fixed income investment that represents a loan from an investor to a borrower.
Stock
Bond
Cash Equivalent
Mutual Fund
- 11. Multiple Choice
A _____ is a short-term investment that is considered highly liquid.
Stock
Bond
Cash Equivalent
Mutual Fund
- 12. Multiple Choice
A _____ is a share of ownership in a company.
Stock
Bond
Cash Equivalent
Mutual Fund
- 13. Multiple Choice
Which of the following statements about stocks is FALSE?
Stocks represent a share of ownership in a company.
When you buy stocks, you get a say in shareholder meetings.
Stocks pay out interest annually.
Stocks are considered relatively risky compared to bonds.
- 14. Multiple Choice
Which of the following statements about bonds is TRUE?
A bond represents a share of ownership in a company.
Bonds are considered relatively risky compared to stocks.
Bonds pay out annual dividends.
When a bond matures, you get the full amount you loaned back with interest.
- 15. Multiple Choice
Which of the following statements about cash equivalents is FALSE?
Cash equivalents earn slightly more interest than a savings account.
Cash equivalents are considered relatively risky compared to stocks.
Cash equivalents include money market funds and short-term government bonds.
Cash equivalents are considered highly liquid.
- 16. Multiple Choice
Which of the following is NOT a consideration when determining your asset allocation?
Time horizon
Personal financial health
Risk tolerance
Portfolio diversification
- 17. Multiple Choice
How comfortable you feel taking the risk of losing your money refers to:
Time horizon
Asset allocation
Personal financial health
Risk tolerance
- 18. Multiple Choice
How long you plan to keep your investments in your portfolio refers to:
Time horizon
Asset allocation
Personal financial health
Risk tolerance
- 19. Multiple Choice
Miguel is 25 years old, has low financial health, a long time horizon and a high risk tolerance. Which asset allocation would you recommend?
85% stocks and 15% bonds/cash equivalents.
60% stocks and 40% bonds/cash equivalents.
40% stocks and 60% bonds/cash equivalents.
20% stocks and 80% bonds/cash equivalents.
- 20. Multiple Choice
Yena is 38 years old, has average financial health, an intermediate time horizon, and an average risk tolerance. Which asset allocation would you recommend?
90% stocks and 10% bonds/cash equivalents.
65% stocks and 35% bonds/cash equivalents.
40% stocks and 60% bonds/cash equivalents.
15% stocks and 85% bonds/cash equivalents.
- 21. Multiple Choice
Jason is 58 years old, has strong financial health, a short time horizon, and an average risk tolerance. Which asset allocation you recommend?
80% stocks and 10% bonds/cash equivalents.
65% stocks and 35% bonds/cash equivalents.
45% stocks and 55% bonds/cash equivalents.
25% stocks and 75% bonds/cash equivalents.
- 22. Multiple Choice
What is diversification?
An investment strategy that mixes a wide variety of investments from different categories within a portfolio.
How comfortable you feel taking the risk of losing your money.
An investment strategy used to analyze company stocks based on their financial statements.
How long you plan to keep your investments in your portfolio.
- 23. Multiple Choice
___________ is an investment strategy that mixes a wide variety of investments from different categories within a portfolio.
Asset allocation
Diversification
Risk tolerance
Technical analysis
- 24. Multiple Choice
Which of the following statements about diversification is TRUE?
Diversification is an investment strategy where you invest all your money in one industry.
Diversification helps you analyze how companies are doing in the stock market.
Diversification guarantees your investment portfolio will be profitable.
Diversification is an investment strategy that mixes a wide variety of investments from different categories within a portfolio.
- 25. Multiple Choice
A well diversified portfolio needs about 3 to 5 stocks from different categories.
True
False
- 26. Multiple Choice
You can diversify your portfolio by investing all your money in one industry.
True
False
- 27. Multiple Choice
A well-diversified portfolio needs about 20-25 stocks from different categories.
True
False
- 28. Multiple Choice
Which of the following statements is TRUE?
Mutual funds trade directly on stock exchanges while exchange-traded funds are purchased from a financial broker.
Mutual funds are actively managed while index funds are passively managed.
Index funds track major market indexes while exchange-traded funds do not.
Mutual funds invest exclusively in stocks while index funds do not.
- 29. Multiple Choice
How is a mutual fund different than an index fund?
Mutual funds are actively managed while index funds are passively managed.
Mutual funds are designed to match major market indexes while index funds do not.
Mutual funds invest exclusively in stocks while index funds invest in a mix of stocks, bonds and cash equivalents.
Mutual funds trade directly on stock exchanges while index funds are bought through financial brokers.
- 30. Multiple Choice
How is an index fund different than an exchange-traded fund?
Index funds track major market indexes while exchange-traded funds do not.
Exchange-traded funds trade directly on stock exchanges while index funds do not.
Index funds are actively managed while exchange-traded funds are passively managed.
Exchange-traded funds have higher fees than index funds.
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