Investment Knowledge Quiz

Which of the following is a type of savings account that typically offers higher interest rates but limits the number of transactions?

• Checking Account

• Money Market Account

• Certificate of Deposit (CD)

• Basic Savings Account

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DOK Level 1: Recall

What is the primary difference between stocks and CDs?

• Stocks are a type of loan to a company, while CDs are ownership in a company.

• Stocks offer fixed interest rates, while CDs have variable returns.

• Stocks represent ownership in a company, while CDs are time deposits with fixed interest rates.

• Stocks are insured by the FDIC, while CDs are not.

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DOK Level 1: Recall

Which of the following is a benefit of a 401k plan?

• Immediate access to funds without penalties

• Employer matching contributions

• Guaranteed returns

• No contribution limits

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DOK Level 1: Recall

What is a common risk associated with investments in stocks?

• Guaranteed loss of principal

• Market volatility

• Fixed interest rates

• FDIC insurance

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DOK Level 1: Recall

Which strategy involves spreading investments across various asset classes to reduce risk?

• Speculation

• Diversification

• Day trading

• Short selling

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DOK Level 1: Recall

What is the tax implication of withdrawing funds from a 401k before the age of 59½?

• No tax implications

• Subject to ordinary income tax and a 10% early withdrawal penalty

• Only subject to capital gains tax

• Tax-free withdrawal

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DOK Level 1: Recall

Which type of savings account typically offers the highest interest rate?

• Basic Savings Account

• Money Market Account

• Certificate of Deposit (CD)

• Checking Account

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DOK Level 1: Recall

What is a key benefit of a 403b plan for employees of non-profit organizations?

• Higher contribution limits than 401k plans

• Employer matching contributions

• Tax-deferred growth

• Guaranteed returns

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DOK Level 1: Recall

Which of the following is a risk associated with investing in CDs?

• Market volatility

• Interest rate risk

• Loss of principal

• No FDIC insurance

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DOK Level 1: Recall

What is one strategy for diversifying investments?

• Investing all funds in a single stock

• Spreading investments across different asset classes such as stocks, bonds, and real estate

• Keeping all funds in a savings account

• Investing only in high-risk assets

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DOK Level 1: Recall