Investment Quiz 2

What is the primary goal of investment?

• To gamble and get rich quickly.

• To allocate resources with the aim of earning returns over time.

• To avoid paying taxes.

• To donate money to charity.

Which of the following is NOT a purpose of investment?

• Wealth growth

• Financial security

• Retirement planning

• Paying off existing debt

Which investment type typically offers the highest potential return but also carries the highest risk?

• Bonds

• Real Estate

• Fixed Deposits

• Cryptocurrency

What is an advantage of investing in mutual funds?

• They are guaranteed to provide high returns.

• They are managed by professionals, reducing the need for individual research.

• They have no risk of losing money.

• They are only available to high-net-worth individuals.

Which of the following is NOT an advantage of investment?

• Wealth creation

• Passive income

• Inflation protection

• Guaranteed returns

What is a potential disadvantage of investing in real estate?

• Low potential for appreciation

• High liquidity

• Easy to manage

• Property values can decline

What is a major risk associated with investing in the stock market?

• Low potential for returns

• Market volatility

• Guaranteed losses

• Lack of diversification

Which of the following is NOT a risk of investment?

• Market risk

• Inflation risk

• Credit risk

• Guaranteed returns

What is inflation risk?

• The risk that the value of your investments will decline due to rising prices.

• The risk that your investments will be stolen.

• The risk that the government will impose new taxes on investments.

• The risk that you will not be able to sell your investments quickly.

How can diversification help reduce investment risk?

• By investing only in low-risk assets.

• By spreading investments across different asset classes.

• By investing only in high-growth companies.

• By investing only in assets that are guaranteed to appreciate in value.