Investment Knowledge Quiz

What is the primary definition of investment?

• The act of saving money for future use

• The process of buying low and selling high

• The act of spending money on goods and services

• The allocation of resources, usually money, to generate income or profit

Which of the following best describes a financial investment?

• Donating to charity

• Paying for a vacation

• Buying stocks or bonds

• Purchasing a new car

In investment terminology, 'return' refers to:

• The amount of risk taken

• The initial amount invested

• The total expenses incurred

• The income generated from the investment

Which of the following is NOT typically considered an investment?

• Real estate

• Treasury bonds

• A personal residence

• A consumer electronics purchase

What is the risk-return tradeoff in investing?

• All investments are equally risky

• Lower risk usually leads to lower returns

• Returns are independent of the risks involved

• Higher returns are guaranteed with any investment

Which of the following best describes speculation?

• Saving money for emergencies

• A long-term strategy focused on safety

• Betting on uncertain outcomes without strategy

• Taking high risks with the hope of significant short-term gains

What is a key characteristic of gambling?

• It involves research and analysis

• It typically provides a stable return

• It requires a long-term commitment

• It is based on chance with no predictable outcome

Which of the following is a primary goal of saving?

• To speculate on asset prices

• To generate high returns quickly

• To take advantage of market volatility

• To protect capital and ensure liquidity

Investment typically involves:

• Avoiding any form of risk

• Immediate profit with no risk

• Random decision-making based on luck

• Analysis and research to increase wealth over time

Which activity is most likely to involve a structured plan and a defined timeline?

• Saving

• Gambling

• Speculation

• Day trading