Investing Quiz #3

What is the system that electronically links brokerage firms called?

• SEC

• NASDAQ

Which agency enforces federal laws concerning the trading of stocks and bonds?

• SEC

• FASB

Which is the largest stock exchange in the US called?

• NYSE

• REIT

What is it called when you invest in various options with different levels of risk?

• Insider trading

• Dollar cost averaging

• Diversifying

Which illegal activity occurs when stocks are traded based on information that is not yet available to the general public?

• Insider trading

• Embezzlement

• Money laundering

Which celebrity was convicted of insider trading?

• Oprah Winfrey
• Beyonce
• Larry Bird
• Martha Stewart

How can investors earn a return on their investments?

• Earning dividends
• Selling shares
• Both of these

As risk goes up, what happens to the potential rate of return?

• It goes up
• It stays the same
• It goes down

How does investing in the stock market differ from putting money in a savings account at a bank?

• Investing is always a less risky option than saving

• Investing is best for short-term situations like emergency funds; saving is best for the long-term

• Investing typically earns between 1-2% while saving generally earns between 5-7%

• Investing allows you to accumulate wealth for retirement while saving is best for short-term purchases or emergencies

Which of the following statements is TRUE about compound interest?

• Compound interest is difficult to calculate, so those who use it earn higher profits for their efforts

• Compound interest means you have a fund manager who is compounding your returns without charging a fee

• Compound interest allows you to earn interest not only on the amount you have saved, but also on the interest you've already earned

• Compound interest directly impacts how much you will be charged in fees