Investing and Financial Markets Quiz (W!se 7:1)

EASILY being able to access - checking account or savings account - your money has...​ ​​ (a)  

• HIGH liquidity
• LOW liquidity
• Initial Investment + Interest
• interest

Answer explanation

An asset that can be sold rapidly for its full value is said to be highly liquid.

vs.

An asset that takes significant time to sell, or one that can only be sold at a discounted value, is considered less liquid or illiquid.

NOT being able to access - stocks or bonds - your money easily is...​ ​​ (a)  

• LOW liquidity
• HIGH liquidity
• Initial Investment + Interest
• interest

Answer explanation

An asset that takes significant time to sell, or one that can only be sold at a discounted value, is considered less liquid or illiquid.

vs.

An asset that can be sold rapidly for its full value is said to be highly liquid.

What is the long term value of investing?

• Short term gains

• Buying luxury items

• Building wealth and achieving goals

Answer explanation

The purpose of investing is increase assets and wealth over time.

To buy an investment fund (like a mutual fund), you must buy it through...

• Brokerage Account

• Credit Union Account

Answer explanation

• A brokerage account is an investment account used to trade assets such as stocks, bonds, mutual funds and ETFs.

• There are two brokerage account options that meet the needs of most investors: online brokers and robo-advisors.

• Brokerage accounts are good for saving for short-term goals, while tax-advantaged accounts are better for retirement savings.

What are the historical results of stocks compared to other investments? In other words, how has the stock market performed overall in comparison to say investing in real estate or coins?

• Outperformed other investments

• Performed the same as other investments

• Underperformed other investments

Answer explanation

Historically, the stock market has gone up more years than it has gone down.

The S&P 500 gained value in 40 of the past 50 years, generating an average annualized return of 9.4%.

In general, when people say "the stock market," they mean the S&P 500 index. The S&P 500 is a collection -- referred to as a stock market index -- of just over 500 of the largest publicly traded U.S. companies.

SOURCE: https://www.fool.com/investing/how-to-invest/stocks/average-stock-market-return/

What is the difference between a broker and a financial planner?

• They are the same

• Brokers focus on insurance, financial planners focus on stocks

• Brokers execute trades, financial planners provide overall financial advice

Answer explanation

A stockbrokers' primary duty is to execute trades, achieving best execution, on behalf of clients.

Financial advisors give out general and specific financial advice for a fee and may manage client assets and portfolio construction.

What is the purpose of a stock exchange?

• To sell collectables

• To buy and sell real estate

• To trade stocks and bonds

Answer explanation

• A stock exchange is a centralized location that brings corporations and governments so that investors can buy and sell equities.

• Auction-based exchanges such as the New York Stock Exchange allow traders and brokers to physically and verbally communicate buy and sell orders.

• Electronic exchanges take place on electronic platforms, so they don't require a centralized physical location for trades.

What does a bear market indicate?

• Rising stock prices

• Declining stock prices

• Stable stock prices

• No impact on stock prices

Answer explanation

What does a bull market indicate?

• Rising stock prices

• Declining stock prices

• Stable stock prices

• No impact on stock prices

Answer explanation

What is the main purpose of a mutual fund?

• Trading foreign currency

• Investing in real estate

• Pooling investor deposits to purchase a basket of securities

Answer explanation