Investments Quiz Budget Challenge

Alex buys $5000 worth of shares in a mutual fund. 4 years later they sell them for $6000. What is their return on investment (ROI)?

• 5%

• 10%

• 15%

• 20%

Brook buys $5000 worth of shares in a mutual fund. 4 years later they sell them for $6000. What is their average annual rate of return?

• 5%

• 10%

• 15%

• 20%

Which is the best definition of investing?

• putting away money for emergencies

• putting away money to make more money

• putting away money for a future purpose

• none of these

Which of the following are true about preferred stocks?

• Pays a dividend

• may or may not pay a dividend

• gives voting rights

• represents a loan to the company

Which of the following are true about common stocks?

• Pays a dividend

• may or may not pay a dividend

• gives voting rights

• represents a loan to the company

Which of the following are true about bonds?

• Pays a dividend

• may or may not pay a dividend

• gives voting rights

• represents a loan to the company

Which of the following has the greatest risk/greatest potential reward?

• Municipal bonds

• Certificates of deposit

• US government bonds

• Common stocks

Which are true about mutual funds?

• Professionally managed

• Low risk

• Easily redeemed

• Well diversified

The previous question said that mutual funds are not low risk. This is true because

• They are lower risk than individual stocks but you can still lose money

• The answer was wrong.

Carter's mutual fund gains 50% in year one and loses 20% percent in year two. What is it's average annual rate of return?

• 10%

• 15%

• 30%

• 60%