Investing basics quiz

A key difference between saving and investing is

• Saving is for everyone, investing is for the wealthy

• Your money is insured when investing, it is not in savings

• Investing has a guaranteed return, savings does not

• Saving is for emergencies & goals, investing is for long-term wealth

Which would be considered the highest risk investment type?

• Stock

• Mutual Fund

• U.S. Government Bond

• Bank Certificate of Deposit

Which is NOT a stock market index?

• New York Stock Exchange

• Dow Jones Industrial Average

• S&P 500

• Nasdaq

A diversified portfolio is desirable because

• It limits investment choice

• It's a good predictor on rate of return

• It increases risk and return

• It decreases risk

Your money remains tax-deferred in this account until you withdraw ( then it's taxed as income).

• Roth IRA

• Traditional IRA

Why is it important to start investing as soon as possible?

• You take less risk when you are young, so money will be safe

• You have more time for your money to compound

• Investing is an easy way to make quick money

• Fees on investments are cheaper when you are younger

This isn't a type of bond

• Government

• Corporate

• Automotive

• James

Approximately, how much can someone contribute to their employer sponsored retirement account per year?

• 1,000

• 5,000

• 9,000

• 19,000

• As much as they want

What is a stock?

• A loan an investor makes to a company or government that pays interest over time.
• A share of ownership in a company
• A collection of investments sold as a package.
• An option to purchase something in the future at todays price.

What is the primary reason for a company to issue stock?

• The stocks help investors earn a higher rate of return
• To raise money to grow the company
• To distribute the risk of bankruptcy across more investors
• To increase greater awareness of the company