Investment and Compound Interest Quiz

What is the advantage of dollar-cost averaging as an investment strategy?

• It guarantees high returns

• It provides tax benefits

• It allows for quick gains in the stock market

• It helps to avoid the risk of 'playing the stock market'

What is the advantage of investing regularly and for the long term?

• Compound interest is always working

• It takes less self-discipline and self-sacrifice

• It requires constant monitoring

• It guarantees immediate wealth

What is the advantage of diversifying investments?

• It requires less time and thought

• It protects against the risk of any one type of investment having a slump

• It guarantees high returns

• It provides tax benefits

What is the advantage of financial education in making wise investment decisions?

• It requires constant monitoring

• It guarantees immediate wealth

• It takes less time to do research

• The more you know about your investments, the better choices you'll make

What is the disadvantage of dollar-cost averaging as an investment strategy?

• It guarantees high returns

• It might be during a time when the price has increased

• It provides tax benefits

• It helps to avoid the risk of 'playing the stock market'

What is a disadvantage of investing regularly and for the long term?

• Delayed gratification isn't always easy

• It guarantees immediate wealth

• It requires constant monitoring

• It takes less self-discipline and self-sacrifice

What is the disadvantage of diversifying investments?

• It guarantees high returns

• It provides tax benefits

• It requires less time and thought

• It can take some time and thought to put together a diverse investment strategy

What can be a challenge in our financial education to make wise investment decisions?

• It takes less time to do research

• It requires constant monitoring

• The more you know about your investments, the better choices you'll make

• There are many sources of information out there, some better than others

What is the example used to illustrate the dollar-cost averaging strategy?

• Carmen has been saving since she was 12

• May has $500 taken from her paycheck each month invested in several mutual funds

• Joe is worried that the US economy is not going to be doing so well

• Anthony is deeply concerned about global warming

What is the example used to illustrate the advantage of investing regularly and for the long term?

• Joe is worried that the US economy is not going to be doing so well

• Anthony is deeply concerned about global warming

• May has $500 taken from her paycheck each month invested in several mutual funds

• Carmen has been saving since she was 12