Investing Fundamentals: A Comprehensive Review

What is the primary goal of investing?

• To increase personal knowledge

• To spend money on luxuries

• To make your money work for you

• To secure a loan

What does ROI stand for?

• Return on Investment

• Risk of Instability

• Rate of Interest

• Return on Internet

Which type of interest allows your investment to grow faster over time?

• Compound interest

• Simple interest

• Variable interest

• Fixed interest

How does the frequency of compounding affect the growth of an investment?

• No impact

• Only affects initial years

• Decreases growth

• Increases growth

What is the Rule of 72 used for?

• Measuring the liquidity of assets

• Determining the risk of an investment

• Estimating how long it takes for an investment to double

• Calculating interest rates

What does the time value of money imply?

• Money has no time value

• Money is worth more in the future

• Money is worth the same over time

• Money is worth more now than in the future

What is a key difference between savings and investments?

• Investments are safer

• Savings offer higher returns

• Savings are primarily for ease of access

• Investments are typically more liquid

What kind of risks might an investor face?

• Price fluctuation and bankruptcy risks

• Only legal risks

• No risks

• Only operational risks

What does high liquidity mean in the context of savings accounts?

• High interest rates

• Long-term investment

• Ease of converting to cash

• High investment risk

What should investors evaluate to align with their financial goals?

• The advice of friends

• Their risk tolerance

• The color of their bank’s logo

• The stock market trends