(Hillary) Understanding Investment Fundamentals

What is the primary purpose of a savings account?

• To invest in stocks

• To earn interest on deposited funds

• To purchase real estate

• To trade commodities

Which of the following best describes the relationship between risk and return in investing?

• Higher risk usually leads to lower returns

• Lower risk usually leads to higher returns

• Higher risk usually leads to higher returns

• Risk and return are unrelated

What is an Individual Savings Account (ISA) primarily used for?

• To avoid paying any taxes

• To save money with tax advantages

• To invest in foreign currencies

• To purchase government bonds

Which of the following is a characteristic of a pension plan?

• It provides immediate liquidity

• It is a short-term investment

• It provides income during retirement

• It is not subject to any regulations

What is the main purpose of a mortgage?

• To finance the purchase of a home

• To invest in the stock market

• To save for retirement

• To buy a car

Which of the following best describes a unit trust?

• A type of savings account

• A pooled investment fund

• A government bond

• A type of insurance policy

What is the primary function of life assurance?

• To provide a savings account

• To offer investment advice

• To provide financial protection to beneficiaries

• To trade stocks

Which of the following is a characteristic of an open-ended investment company (OEIC)?

• It has a fixed number of shares

• It can issue and redeem shares at any time

• It is not regulated

• It only invests in real estate

What is the primary benefit of investing in the stock market for companies?

• To increase their debt

• To raise capital for expansion

• To reduce their workforce

• To avoid paying taxes

Which of the following best describes an investment trust?

• A type of savings account

• A closed-ended fund that invests in a diversified portfolio

• A government bond

• A type of insurance policy