Index Funds for Teen Investors Quiz

What is an index fund?

• A fund that includes a variety of stocks to mimic a market index

• A fund that invests only in technology stocks

• A fund that only invests in international markets

• A fund that focuses on high-risk investments

Why is diversification important in investing?

• It ensures all investments are in one industry

• It focuses on short-term gains

• It guarantees high returns

• It reduces the risk by spreading investments across different stocks

Which of the following is a broad market index in the United States?

• The Tokyo Stock Exchange

• The Standard and Poor’s 500 Index

• The London Stock Exchange

• The Shanghai Composite Index

What is the main difference between mutual funds and ETFs for teen investors?

• Mutual funds require a higher upfront investment

• ETFs are only available to adults

• Mutual funds are traded continuously throughout the day

• ETFs have no expense ratios

Which ETF is associated with the NASDAQ Index?

• Invesco QQQ Trust

• Vanguard 500 Index Fund

• SPDR Dow Jones Industrial Average ETF Trust

• iShares Russell 2000 ETF

What is an expense ratio?

• The profit made from an ETF

• The cost of managing an ETF

• The percentage of stocks in a mutual fund

• The interest rate on a bond

Which of the following ETFs has the lowest expense ratio?

• Vanguard 500 Index Fund

• Invesco KBW High Dividend Yield Financial ETF

• SPDR Dow Jones Industrial Average ETF Trust

• Invesco QQQ Trust

What return should a teen investor expect from an index-based ETF?

• No returns at all

• Guaranteed 20% annually

• Double the returns of the index it tracks

• Close to the returns of the index it tracks