Investing Quizz Fall 2022

A key difference between saving and investing is

• Saving is for everyone, investing is for the wealthy

• Investing has a guaranteed return, savings does not

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

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

Why is compound interest more beneficial than simple interest?

• Your money grows faster when it is compounded

• You do not earn interest on your interest

• Compound interest is hard to calculate, so fewer use it

• Fees for compound interest are greater than simple interest

Which would be considered the highest risk investment type (of those shown)?

• Stock

• Bond

• Mutual Fund

• Money Market Account

Historically, the relationship between risk and return can be stated as

• Higher risks will have potential for higher return

• Higher risks will have a potential for lower return

• Lower risks will have potential for higher return

• No relationship exists between risk and return

Andy earned $300 on a $1000 investment. What is his ROI (return on investment)?

• 2%

• 3%

• 30%

• 70%

A diversified portfolio is desirable because

• It limits investment choice

• It increases risk and return

• It's a good predictor on rate of return

• It often times decreases or minimizes risk

Why is it important to start investing as soon as possible (when you are young)?

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

• Investing is an easy way to make quick money

• You have more time for your money to compound

• Fees on investments are cheaper when you are younger

True or False: Investing in a diversified portfolio of stocks guarantees you will not lose money.

• True

• False

You bought 10 shares of stock in StreamingVideoCo for $40 per share. Three months later you sold the ten shares of stock for $100 per share. What was your gain or loss on StreamingVideoCo stock? Assume that StreamingVideoCo didn't pay a dividend during that period.

• Loss of $150

• Loss of $300

• Gain of $600

• Gain of $1,000

You can always profit from stocks by holding the shares of stock for at least 5 years.

• True

• False