Investing Review

What is the main goal of investing?

• To save money for a short-term purchase

• To generate quick profits

• To build wealth for long-term goals

• To avoid taxes

When the risk of a bond increases, the interest rate on the bond typically:

• Increases

• Decreases

• Stays the same

• Becomes zero

What type of market occurs when stock prices are increasing because more investors are buying stocks?

• Bear market

• Bull market

• Stable market

• Volatile market

When overall interest rates rise, what happens to the value of an existing bond with a lower interest rate?

• It increases

• It decreases

• It remains the same

• It becomes more stable

Why is it important to diversify investments?

• To reduce risk by spreading investments across different companies

• To increase risk and improve short-term returns

• To ensure guaranteed returns

• To limit the number of stocks owned

Which of the following best describes the stock market?

• A place where only wealthy individuals can invest

• A place where shares of companies are bought and sold

• A place where bonds are sold to investors

• A place where all businesses are required to be listed

Why do people invest money instead of saving it?

• For a higher rate of return

• To avoid any risk

• To keep their money in a savings account

• To avoid the stock market

What is the main risk of investing in only one company’s stock?

• It is guaranteed to be profitable

• If the company fails, you could lose all your investment

• The company will always outperform the market

• You have to pay higher fees

Which of the following is an example of making money from stocks?

• Owning bonds

• Receiving interest payments from bonds

• Receiving dividends or capital gains

• Holding cash in a savings account

Which time frame is best for understanding the long-term trend of a stock's price?

• 1-day

• 5-day

• 1-month

• 5-year