W!SE Test Prep INVESTING QUIZ (Part 1)

What is the primary goal of investing?

• To spend money on goods and services

• To save money for immediate use

• To get your money working for you

• To keep your money safe under your mattress

Which of the following is NOT a way to make money through investing?

• Earning interest

• Receiving dividends

• Capital gains

• Winning the lottery

What does ROI stand for?

• Return Of Interest

• Risk Of Interest

• Return On Investment

• Rate Of Inflation

What is compound interest?

• Interest earned on the original investment only

• Interest that remains the same every year

• Interest earned on both the original investment and previous interest

• A fixed interest rate for the life of the investment

How does the frequency of compounding affect the growth of an investment?

• No impact on growth

• Slows down growth

• Stops growth after a year

• Increases growth

What is the Rule of 72 used for?

• Figuring out the total return on investment

• Measuring the risk of an investment

• Determining how long it takes for an investment to double

• Calculating annual interest rates

What does liquidity refer to in terms of savings and investments?

• The amount of money invested

• The risk associated with an investment

• The ability to convert to cash quickly

• The interest rate of a savings account

What is a major difference between savings and investments?

• Investments have high liquidity

• Savings can be used for long-term goals

• Investments cannot lose value over time

• Savings prioritize ease of access over growth

What kind of risk might you face if a company you invested in goes bankrupt?

• Interest rate risk

• Market risk

• Credit risk

• Operational risk

What should your investment decisions be based on?

• A random selection

• The latest trends on social media

• Your risk tolerance

• The advice of friends and family