Investment Quiz 1

Match the following

• Index Fund

• Aims to mirror the performance of a specific index, like the S&P 500, by holding all or most of the securities in the index.

• Index Fund

• 1. Pools money from many investors to buy a diversified portfolio of stocks, bonds, and other securities, managed by a professional for a fee 

• Target-Date Fund (TDF)

• 1. Adjusts its asset allocation and risk level over time based on a specific retirement goal date. 

• Mutual Fund

• 1. Can be bought and sold on the stock market, just like individual stocks. 

Match the following terms with their definitions

• Stock Quote

• 1. The price of a share of ownership of company that is listed on an exchange 

• Stock

• 1. An investment option that allows you to own a small piece of a company

• Stock Split

• An action where a company increases the number of shares outstanding and lowers the individual value of each share

Investing in an Index Fund is an example of active investing.

• True

• False

A market is when more investors are buying stocks, which causes stock values to increase is called a ______________

• boar market

• bird market

• bull market
• bear market

A market is when investors are selling stocks, which causes stock values to decrease is called a ______________

• boar market

• bird market

• bull market
• bear market

1. The higher the risk associated with a bond, the ______ likely a corporation might default on paying the investor. Interest rates for riskier bonds tend to be ______ so that investors are ______ willing to take on that risk.

• more; higher; more
• less; higher; less
• more; lower; less
• less; lower; less
• more; higher; less

What is an investment in which an investor lends money to a corporation or government with the expectation that it will be paid back with interest?

• Bond
• Mutual Fund
• EFT

• Stock
• IRA

Match the following

Groups:

(a) Active Investing

,

(b) Passive Investing

• No Human Manager

• Goal is to match the return of the market

• Lower Risk

• Higher Fees

• Higher Risk

• Lower Fees

• Goal to outperform the market

• Human Fund Manager

24. How does an investor make a profit from investing in a stock? (Choose 2)

• By investing in bonds indefinitely without selling

• By earning dividends.

• By buying stocks at a higher price than they are worth
• By receiving interest payments on stocks
• By selling stocks for more than they paid

1. As inflation increases, the purchasing power of the dollar increases, which impacts how much you can buy in goods and services.

• True

• False