Banking and Investment Quiz (Part One)

A mortgage is a loan specifically for what kind of investment?

• College

• A Car

• A vacation

• Real Estate

What is a checking account?

• A savings product that pays a higher interest rate than a savings account.

• A type of account used for borrowing money from a bank.

• A type of account used for everyday transactions and paying bills.

• A long-term investment account with a fixed maturity date.

What is compound interest?

• Interest paid on the principal amount only.

• Interest paid on the principal and accumulated interest.

• Interest paid in installments over a fixed period of time.

• Interest paid at a higher rate for a certain period of time.

Which financial intermediary provides traditional services like checking and savings accounts, and loans?

• Banks and Credit Unions

• Finance Companies

• Mutual Funds

• Life Insurance

What is credit risk?

• The risk of not being repaid when loaning money.

• The risk of not being able to convert an investment back into cash quickly.

• The risk of inflation eroding the value of assets.

• The risk of passing up better investment opportunities.

How do liquidity, return, and risk work together when making decisions on investments?

• Higher liquidity leads to higher return and lower risk.

• Higher return leads to higher liquidity and lower risk.

• Higher risk leads to higher liquidity and lower return.

• Higher risk leads to higher return and lower liquidity.

In general, the riskier the investment, the ______ the return will be

• Higher

• Lower

What is the difference between a bear and bull market?

• A bear market is a market condition where stock prices are rising and investor confidence is high, while a bull market is a market condition where stock prices are stagnant and investor confidence is low.
• A bear market is a market condition where stock prices are falling and investor confidence is low, while a bull market is a market condition where stock prices are rising and investor confidence is high.

What is the Dow Jones Industrial Average?

• The Dow Jones Industrial Average is a cryptocurrency.
• The Dow Jones Industrial Average is a stock market index used as a metric for the health of the stock market

• The Dow Jones Industrial Average is a type of bond.
• The Dow Jones Industrial Average is a commodity market index.

The SEC does what for the stock market?

• Provide financial advice to investors
• Regulate and enforce federal securities laws
• Set interest rates for loans
• Manage retirement accounts