SMG INVESTING UNIT QUIZ REVIEW (2025)

A key difference between saving and investing is

• Saving is for everyone, investing is for the wealthy

• Your money is insured when investing, it is not in savings

• Investing has a guaranteed return, savings does not

• Saving is for emergencies & goals, investing is for long-term wealth

What is the main appeal of an index fund?

• They are always actively managed to add a human touch

• They are typically low cost and diversified investments

• They are always managed by a robo-advisor to remove human bias

• They give you partial ownership of a single company

What is a key advantage of investing in mutual funds?

• They are risk-free investments

• They have no fees

• They are managed by professional fund managers

• They offer guaranteed returns

What is the primary purpose of an emergency fund?

• To invest in high-risk stocks

• To cover unexpected expenses

• To pay off long-term debt

• To save for retirement

Andy bought 5 shares of a company for $10. Later, he sold all 5 shares for $15. What was his profit/loss on the stock?

• Profit of $5

• Loss of $5

• Profit of $25

• Loss of $25

What is a realistic financial goal for a college student?

• Buying a new car in a year

• Saving for retirement

• Paying off student loans within 5 years

• Traveling around the world in 6 months

A diversified portfolio is desirable because

• It limits investment choice

• It's a good predictor on rate of return

• It increases risk and return

• It decreases risk

Which of the following is a key characteristic of the primary market (IPO)?

• It involves the trading of existing securities

• It deals exclusively with government bonds

• It deals exclusively with ETFs and Index Funds

• It is where new stocks are offered for sale to investors

The relationship between risk and return can be stated as

• Higher risk indicates higher return

• Higher risk indicates lower return

• Lower risk indicates higher return

• No relationship exists between risk and return

An account that is used to buy and sell stocks, bonds, and funds is called a

• Roth IRA

• ETC Account

• Brokerage Account

• Target Date Fund