NGPF Investing 2 Vocab Quiz

What is a financial asset that can be bought and sold in a market, such as stocks or bonds?

• Treasury Bond

• Security

• Shareholder

• Stock Exchange

Answer explanation

A financial asset that can be bought and sold in a market is called a security. This term encompasses various instruments like stocks and bonds, making 'Security' the correct answer.

What is the second-largest stock exchange in the world, behind the NYSE?

• A) S&P 500

• B) Treasury Bond

• C) Nasdaq

• D) Roth IRA

Answer explanation

The Nasdaq is the second-largest stock exchange in the world, following the New York Stock Exchange (NYSE). It primarily lists technology and growth-oriented companies, making it a key player in global finance.

Which financial instrument represents partial ownership of a company and can be bought or sold?

• Mutual Fund

• Stock

• Risk

• Treasury Bond

Answer explanation

The correct answer is 'Stock' because it represents partial ownership in a company and can be traded on stock exchanges. Unlike mutual funds, risks, or treasury bonds, stocks directly reflect ownership in a corporation.

A collection of stocks and/or bonds managed by an expert for a fee is called:

• Pension

• Robo-Advisor

• Mutual Fund

• Stock Exchange

Answer explanation

A mutual fund is a collection of stocks and/or bonds managed by professionals for a fee, making it the correct choice. Pension refers to retirement funds, robo-advisors are automated services, and stock exchanges are marketplaces.

What term refers to the ability of money to buy goods and services, which can be weakened by inflation?

• A) Purchasing Power

• B) Risk

• C) Portfolio

• D) Rate of Return

Answer explanation

The term 'Purchasing Power' refers to the ability of money to buy goods and services. Inflation decreases purchasing power, meaning you can buy less with the same amount of money over time.

Which is the world's largest stock exchange, located in New York City?

• Nasdaq

• Stock Exchange

• S&P 500

• New York Stock Exchange (NYSE)

Answer explanation

The New York Stock Exchange (NYSE) is the largest stock exchange in the world, located in New York City. It is distinct from Nasdaq and the S&P 500, which are different entities in the financial market.

What federal program provides monthly benefits to retirees, disabled individuals, and surviving families?

• Social Security

• Passive Investing

• Target Date Fund (TDF)

• Rate of Return

Answer explanation

The federal program that provides monthly benefits to retirees, disabled individuals, and surviving families is Social Security. It ensures financial support for these groups, making it the correct choice.

A retirement savings plan sponsored by an employer that often includes matching contributions is called:

• Roth IRA

• Traditional IRA

• Traditional 401(k) Plan

• Treasury Bond

Answer explanation

A Traditional 401(k) Plan is an employer-sponsored retirement savings plan that often includes matching contributions, making it distinct from IRAs and Treasury Bonds.

What measures the money gained or lost on an investment relative to the amount invested?

• Risk

• Rate of Return

• Passive Investing

• Portfolio

Answer explanation

The Rate of Return measures the money gained or lost on an investment relative to the amount invested. It is a key indicator of investment performance, unlike Risk, Passive Investing, or Portfolio, which refer to different concepts.

When considering inflation and taxes, investors look at the _____ instead of the nominal rate.

• Real Rate of Return

• S&P 500

• Treasury Bond

• Target Date Fund (TDF)

Answer explanation

Investors consider the Real Rate of Return to account for inflation and taxes, as it reflects the actual purchasing power of their investments, unlike the nominal rate which does not adjust for these factors.