Financial Literacy - Quiz 4

What are the three key factors you need to know about every investment?

• Risk, Profit, Ability

• Value, Growth, Security

• Income, Capital Gain, Uncertainty

• Return, Risk, Liquidity

What does Return refer to in investments?

• The value of an investment

• The uncertainty associated with an investment

• The profit that an investor makes on an investment

• The ability to cash in an investment quickly

What is Liquidity in the context of investments?

• The value of an investment

• The uncertainty associated with an investment

• The profit that an investor makes on an investment

• The ability to sell an investment quickly at or near the current market price

What does Risk mean in investments?

• The profit that an investor makes on an investment

• The value of an investment

• The ability to cash in an investment quickly

• The uncertainty associated with an investment

Why might a young investor be willing to take more risks?

• To provide security for their family

• To make major purchases such as a family home

• To save more for retirement

• To plan for the long term and have time to recover from losses

What is the effect of inflation on the purchasing power of money?

• It has no effect on the purchasing power of money

• It increases the purchasing power of money

• It decreases the purchasing power of money

• It stabilizes the purchasing power of money

What is the concept of Time Value of Money?

• Money retains the same value regardless of time

• Money available in the future is worth more than the same amount at present

• Money available at the present time is worth more than the same amount in the future

• Money loses its value over time

What is Diversification in the context of investments?

• Investing in commodities only

• Investing only in high-risk options

• Investing in a variety of investments to reduce risk

• Putting all your money into one investment

What are Equity Securities?

• Securities that represent ownership in a company

• Instruments with a fixed amount and maturity date

• Securities issued by the government

• Securities with a specific rate of interest

What are Debt Securities?

• Securities issued by the government

• Securities that represent ownership in a company

• Instruments with a fixed amount and maturity date

• Securities with a specific rate of interest