Financial Literacy: Stocks, Bonds, and Cryptocurrency

What is a stock?

• A type of cryptocurrency

• A loan to a corporation or government

• Ownership in a corporation

• A fixed interest financial asset

What does it mean when a bond is called "investment grade"?

• It is suitable for all investors

• It has a high yield

• It is considered to be of high quality by rating agencies

• It can be converted into stock

Which of the following is a characteristic of a bond?

• It represents ownership in a company

• It has a variable interest rate

• It is a form of long-term debt

• It guarantees a profit

What is a cryptocurrency?

• A digital or virtual currency that uses cryptography for security

• A physical currency like the dollar or euro

• A type of stock

• A type of bond

What does it mean to short a stock?

• To buy a stock and sell it after a long period

• To sell a stock before buying it, hoping to buy it back at a lower price

• To invest in a stock for the short term

• To lend a stock to another investor

What is a blockchain?

• A type of cryptocurrency

• A digital ledger in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly

• A stock exchange

• A bond market

What is the primary market?

• Where stocks are traded between investors

• Where new stock or bond issues are sold to investors

• The market for cryptocurrencies

• A physical market where securities are bought and sold

What does "diversification" mean in investing?

• Investing all your money in a single asset

• Investing in a variety of assets to reduce risk

• Buying and selling stocks frequently

• Focusing on bonds only

What is a mutual fund?

• A fund that invests only in stocks

• A fund that invests only in bonds

• A pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments, and other assets

• A private fund with a fixed number of shares

What is the main difference between a stock and a bond?

• Stocks are more secure than bonds

• Bonds represent ownership in a company, while stocks do not

• Stocks represent ownership in a company, while bonds are loans to the company or government

• There is no significant difference; both are types of stocks