Finance Investment Quiz

1. In retirement, it's common to rely on income from all of the following Sources EXCEPT

Government Loan

All of the following are strategies to reduce risk EXCEPT..

Hiring an investment manager who you think can beat the market

Juan buys a bond with a fixed coupon rate of 3%. Six months later, similar bonds that are issued have a coupon rate of 4%. Which of the following is TRUE if he chooses to sell the bond before maturity?

The price of Juan's bond will decrease

Which type of retirement account is an investment option for ANY young person?

Traditional IRA

All of the following are recommended strategies for beginner investors *1/1 EXCEPT

Try to pick winning stocks and beat the market

What does it mean when someone says "Good investing is boring"?

You're better off making long-term investments that don't require day-to-day management

Which of the following most accurately describes what a bond is?

À bond is an investment in which an investor lends money to a corporation or government with the expectation that it will be paid back with interest

One difference between bonds and bond funds is...

A bond fund can help you diversify your investment portfolio

When talking about investing, what does it mean when someone refers to a fund?

A pool of money from shareholders that is used to invest in a collection of assets like stocks and bonds

What is a stock?

An investment option that allows you to own a small piece of a company

Which of the following statements BEST describes the stock market?

Businesses selling partial ownership of their companies to raise capital

Which of the following statements BEST describes investing?

Buying assets, like stocks, with the intention to hold them and grow your wealth over the long term

Over time, the stock market has

Experienced highs and lows but increased in overall value

401(k)s and IRAs are both.

Investment accounts that you can open to help you invest for retirement

Leaving your investments in the stock market alone for at least five years is a good way to reduce risk because.

It keeps you from reacting to dips in the market and selling at too low of a price

An investor can best harness the power of compounding by doing all of *1/1 the following, EXCEPT.

Making frequent trades

Which of the following statements is TRUE about the state of retirement in the U.S.?

Many people may need to invest to build wealth and to support themselves in retirement

During a BULL market.

More investors are buying stocks, which causes stock values to increase

Which of the following is a characteristic of a brokerage account?

No penalties for withdrawing your money

All of the following are true about a passively managed fund EXCEPT...

Passively managed funds are managed by a fund manager

Which of the following is an example of diversification?

Purchasing shares of stock in a variety of companies and industries

Which of the following is TRUE about a stock split? *

Stock splits make a stock more accessible to a greater number of investors

When reading a stock quote, which of the following metrics would give you the best idea of the total value of the company?

The Market Cap

Eli is planning ahead for retirement. They should consider all of the following factors when determining how much they'll need in retirement EXCEPT...

The current balance in their checking account

The goal of an actively managed fund is to outperform the market. What does this mean

The fund is managed by a fund manager, who tries to beat the overall market's rate of return

All of the following are reasons to invest, EXCEPT...

To earn a consistent rate of return with lower risk than typical savings accounts

2. All of the following are advantages of a 401 (k), EXCEPT...*

You can invest your 401 (k) into a wider variety of asset types than you can with an IRA