Investing Basics Quiz

Which of the following is a type of investment that represents ownership in a company?

• Bond

• Stock

• Certificate of Deposit

• Savings Account

What does the term "diversification" mean in investing?

• Investing all your money in one stock

• Spreading investments across different assets

• Borrowing money to invest

• Selling all investments at once

Which of the following best describes a bond?

• A share of ownership in a company

• A loan made to a government or corporation

• A type of insurance

• A checking account

What is the primary purpose of an index fund?

• To outperform the market

• To track the performance of a specific market index

• To provide insurance

• To guarantee returns

Which term refers to the profit made from selling an investment at a higher price than it was purchased?

• Dividend

• Capital gain

• Interest

• Principal

If you invest $1,000 in a savings account with an annual interest rate of 5%, how much interest will you earn in one year (simple interest)?

• $25

• $50

• $100

• $500

Which of the following is an example of a low-risk investment?

• Penny stocks

• Government bonds

• Cryptocurrency

• Options trading

A company pays a dividend of $2 per share annually. If you own 100 shares, how much will you receive in dividends each year?

• $20

• $100

• $200

• $2,000

• 10%

• 20%

• 25%

• 50%

Which investment strategy involves buying a variety of assets to reduce risk?

• Speculation

• Diversification

• Short selling

• Leverage