Investment Basics Quiz

What are considered common investment vehicles?

• Art and antiques

• Real estate and gold

• Stocks, bonds, and mutual funds

• Cars and limousines

How do shareholders typically earn a profit from stocks?

• By receiving dividends

• Rent from property

• Interest payments

• Fixed income

What is the primary risk associated with stocks?

• Government regulation

• Low liquidity

• Fixed returns

• High volatility

What does purchasing a bond essentially mean?

• Investing in real estate

• Lending money to the issuer

• Purchasing a collectible

• Buying a share of a company

What is the main advantage of bonds over stocks?

• Greater stability

• More volatility

• No risk of loss

• Higher returns

What is a mutual fund?

• A collection of stocks and bonds

• A single stock

• A government bond

• A type of bank account

Why is diversification important in investing?

• It simplifies management

• It increases the investment size

• It reduces overall risk

• It guarantees profits

What is not a guaranteed outcome of investing in a professionally managed mutual fund?

• Profit

• Access to multiple stocks

• Professional management

• Diversification