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 of the following statements 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

Daniel has saved $2,000 in a savings account that earns 0.5% interest annually. What will most likely happen to the purchasing power of his savings over time?

Back

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

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

What is the relationship between risk and return in investments?

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

How is a bond different from a stock?

Back

A bond is a loan you give to an organization while a stock is partial ownership in a company.

Front

An actively managed mutual fund…

Back

Is managed by a fund manager who charges a fee

Front

How can someone make money from investing in a stock?

Back

They receive dividends or they sell the stock at a higher price than what they bought it for.