Investment Basics Quiz

What is the act of redirecting resources from being consumed today so that they may create benefits in the future?

• Spending

• Investment

• Saving

• Borrowing

Which of the following is a representation of ownership in a public company?

• Hedge Fund

• Stock

• Bond

• Mutual Fund

What are the two ways for stockholders to make money from stocks?

• Dividends and Coupons

• Capital Gains and Dividends

• Capital Loss and Interest

• Interest and Dividends

What is the interest rate that a bond issuer will pay to the bondholder called?

• Coupon Rate

• Maturity Date

• Par Value

Which of the following is a financial intermediary that pools the savings of many individuals and invests the money in a variety of stocks, bonds, and other financial assets?

• Mutual Fund

• Pension Fund

• Hedge Fund

• Bank

What is the best way to reduce risk when investing in securities?

• Investing in only stable funds

• Investing in real estate only

• Investing in a diverse range of securities

• Investing in only risky ventures

What is the main factor to consider when evaluating an investment?

• Potential Return

• Time

• Interest Rate

• Risk

Which type of interest is based on the principal amount and the interest that accumulates on it in every period?

• Accrued Interest

• Annual Interest

• Compound Interest

• Simple Interest