Investing - Unit Test

Front

How does investing in the stock market differ from putting money in a savings account at a bank?

Back

Investing allows you to accumulate wealth for retirement while saving is best for short-term purchases or emergencies

Front

Which statement is TRUE about compound interest?

Back

Compound interest allows you to earn interest not only on the amount you have saved, but also on the interest you've already earned.

Front

What kinds of behaviors can PREVENT people from making smart investing decisions?

Back

Exiting the market because that’s what everyone else is doing

Front

What will most likely happen to the purchasing power of Daniel's $2,000 savings over time?

Back

His purchasing power will DECREASE because the interest rate is lower than the historical rate of inflation.

Front

Difference between an individual bond and a bond fund?

Back

A bond is considered to be a less diversified investment than a bond fund

Front

Which of the following statements about Exchange Traded Funds (ETFs) is TRUE? Options: ETFs are traded once a day after the market closes, An ETF is a single stock that you can buy in the stock market, Actively managed ETFs have very low fees, ETF prices can change throughout the day as they are exchanged on the market

Back

ETF prices can change throughout the day as they are exchanged on the market

Front

You bought 10 shares of stock in StreamingVideoCo for $45 per share and sold them for $80 per share. What was your profit or loss?

Back

Profit of $350

Front

Which of the statements below BEST describes the relationship between risk and return when considering an investment?

Back

Investors expect to earn a higher return when they invest in a high risk asset.

Front

Why is diversification a recommended investment strategy?

Back

Diversifying your portfolio helps reduce risk

Front

Characteristic of dollar-cost averaging? Options: Dollar-cost averaging is a way to decrease your risk, Dollar-cost averaging is a strategy that only expert investors use, Dollar-cost averaging is advantageous because earnings are untaxed, Dollar-cost averaging is offered exclusively through robo-advisors

Back

Dollar-cost averaging is a way to decrease your risk