Investing

What is the primary goal of investing?

• To save money for immediate use

• To ensure money is safe and not at risk

• To grow your money over time

• To have funds available for daily expenses

What is a stock?

• A type of bond

• A share in the ownership of a company

• A fixed interest financial asset

• A loan to a corporation or government

What does it mean to diversify your investment portfolio?

• To invest all your money in stocks

• To buy shares from only one company

• To spread your investments across various assets to reduce risk

• To focus on bonds only

What is a mutual fund?

• A collection of stocks and/or bonds managed by an investment company

• A private fund with a fixed number of shares

• An account that offers check-writing privileges

• A government-issued security

What is the difference between a stock and a bond?

• Stocks are loans to the government, and bonds are shares in a company

• There is no difference; they are the same thing

• Stocks give you ownership in a company, while bonds are loans you give to an entity

• Bonds are riskier than stocks

What does the term "compound interest" refer to in the context of investing?

• Interest calculated on the initial principal alone

• A fixed interest rate for the life of the investment

• Interest calculated on the initial principal and also on the accumulated interest of previous periods

• A method of calculating interest where the rate decreases over time

What is an index fund?

• A fund that attempts to beat the market by selecting stocks

• A fund that invests in companies based on their size

• A mutual fund or ETF that aims to replicate the movements of a specific index

• A fund that only invests in bonds

What is the primary risk of investing in the stock market?

• The risk of losing time

• The risk of not making any profit

• The risk of losing all your money

• There is no risk

What does it mean if a company pays dividends?

• The company is borrowing money from its shareholders

• The company is reinvesting its profits into the business

• The company is distributing a portion of its profits to its shareholders

• The company's stock price is increasing

What is the significance of the price-to-earnings (P/E) ratio in investing?

• It indicates how much a company pays out in dividends each year

• It shows the relationship between a company's stock price and its earnings per share

• It measures a company's financial health and stability

• It determines the interest rate on bonds issued by the company