Saving and Investing Economics Test

Front

What is the definition of "risk" in the context of investing?

Back

The potential for loss or variability in investment returns

Front

Which of the following is a basic concept of the stock market? Stocks represent ownership in a company, Stocks are a type of bond, Stocks guarantee a fixed return, Stocks are only traded by banks

Back

Stocks represent ownership in a company

Front

What is diversification in investing?

Back

Spreading investments across various assets to reduce risk

Front

Which of the following is an economic indicator?
Options:
Gross Domestic Product (GDP)
The color of a company's logo
The number of employees in a company
The price of a single stock

Back

Gross Domestic Product (GDP)

Front

Which of the following best describes the relationship between risk and return? Options: Higher risk typically leads to higher potential returns, Lower risk always leads to higher returns, Risk and return are unrelated, Higher risk always guarantees higher returns

Back

Higher risk typically leads to higher potential returns

Front

Identify a simple diversification technique.

Back

Investing in a mix of stocks and bonds

Front

What does the term "bull market" refer to?

Back

A market characterized by rising stock prices

Front

A card authorizing the user to buy goods and services with funds borrowed from the bank

Back

Credit card

Front

An entrepreneur who needs financial help in buying new equipment for her thriving bakery might take out a

Back

Small Business loan

Front

Most people need Social Security, company retirement plans, and savings to pay for retirement.

Back

True