Money
Ed
Unit 1
Unit 2
Unit 3
Unit 4
Quiz
Investment Basics
Section Quiz
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Which of the following factors affect the risk level of an investment?
a. business failure
b. changes in the economy
c. interest rate changes
d. all of the above
What is the fundamental difference between saving and investing?
a. saving provides funds for emergencies
b. saving provides a low rate of return
c. investing increases net worth
d. investing involves risk
Which option would best diversify an investment portfolio?
a. choose securities from a variety of assets such as stocks, bonds, cash, and real estate
b. choose a variety of Large Cap stocks
c. choose a variety of Small Cap stocks
d. choose a variety of US Treasuries
What factors should you consider when allocating money to an investment portfolio?
a. investment goals
b. risk tolerance
c. taxes
d. all of the above
Why is risk tolerance important in making investment decisions?
a. affects how aggressively you choose to invest
b. affects the types of investments you make
c. reflects an investors emotional and fiscal capacity
d. all of the above
Which of the following statements about stocks is false?
a. stock represents a share of equity ownership in a corporation
b. stocks are debt obligations
c. common and preferred stock are offered to investors
d. stocks pay dividends to shareholders
Which statement best describes dividends?
a. cash payments made by corporations to their stockholders
b. cash payments made by the federal government for bond obligations
c. cash payments paid to brokerage firms for tax obligations
d. none of the above
Which statement best describes mutual funds?
a. a collection of only stocks
b. a collection of only bonds
c. a collection of stocks and bonds
d. a collection of US Treasuries
Why do investors buy bonds?
a. predictable income
b. pay interest twice a year
c. offset risks
d. all of the above
What is the fundamental difference between a Roth IRA and Traditional IRA?
a. tax structure
b. income potential
c. savings rate
d. none of the above