WorksheetsInvesting Quiz
Total questions: 40
Worksheet time: 20mins
An employer-sponsored investment plan that allows individuals to set aside tax-deferred income for retirement or emergency purposes is called a ________.
401(k)/403(b)
Roth IRA
Traditional IRA
Savings Account
Funds run by investment managers who try to outperform an index over time are known as ________.
Active Investing
Passive Investing
Index Funds
Exchange-Traded Funds
Fixed-income securities that are issued by corporations and governments to raise capital are called ________.
Bond
Stock
Equity
Derivative
An account that you open with a brokerage firm who buys and sells securities on your behalf is called a ________.
Brokerage Account
Savings Account
Checking Account
Retirement Account
A profit from the sale of property or of an investment is known as ________.
Capital Gain
Revenue Loss
Operating Expense
Depreciation
The process in which interest is earned on both the principal and on any previously earned interest is called ________.
Compounding
Simple Interest
Depreciation
Amortization
The act of investing in different industries, areas, countries, and types of financial instruments to reduce risk is known as ________.
Diversification
Concentration
Speculation
Arbitrage
A part of the profit of a company that is paid to the people who own shares in it is called a ________.
Dividend
Interest
Capital Gain
Revenue
Collections of stocks and bonds that are traded on securities exchanges, but are traded more like individual stocks than mutual funds are called ________.
Exchange-Traded Fund (ETF)
Mutual Fund
Bond Fund
Index Fund
A mutual fund that tries to match the performance of a particular index by investing in the companies included in that index is called an ________.
Index Fund
Growth Fund
Bond Fund
Money Market Fund
A tax-sheltered retirement plan, that is not employer sponsored, in which people can annually invest earnings up to a certain amount is called an ________.
Individual Retirement Account (IRA)
401(k) Plan
Roth IRA
Pension Plan
The process of setting money aside to increase wealth over time for long-term financial goals is known as ________.
Investing
Saving
Spending
Gambling
The ease with which an asset can be converted into cash is called ________.
Liquidity
Solvency
Profitability
Leverage
A fund that pools the savings of many individuals and invests this money in a variety of stocks, bonds, and other financial assets is called a ________.
Mutual Fund
Savings Account
Certificate of Deposit
Hedge Fund
The money an investor receives above and beyond the sum of money initially invested is called ________.
Return
Interest
Profit
Revenue
A type of tax-advantaged individual retirement account to which you can contribute after-tax dollars is called a ________.
Roth IRA
Traditional IRA
SEP IRA
Simple IRA
A piece of ownership in a company, mutual fund or other investment is called a ________.
Share
Bond
Dividend
Loan
A share in the ownership of a company, including a claim on the company's earnings and assets is called a ________.
Stock
Bond
Mutual Fund
Certificate of Deposit
A mutual fund that gradually rebalances and reallocates assets as you get closer to retirement is called a ________.
Target Date Fund
Index Fund
Growth Fund
Income Fund
The payment owed by an individual, business, or other entity to a tax authority is called ________.
Tax Liability
Revenue
Income
Debt
An individual retirement account that is tax deductible is called a ________.
Traditional IRA
Roth IRA
SEP IRA
Simple IRA
A specified term of employment to gain access to benefits, such as retirement funds, is called ________.
Vesting
Probation
Tenure
Contract
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
Why is compound interest more beneficial than simple interest?
Your money grows faster when it is compounded
Your taxed on simple interest, but not compound interest
Fees for compound interest are greater than simple interest
Compound interest is hard to calculate, so fewer use it
Which would be considered the highest risk investment type?
Stock
Mutual Fund
Bond
Money Market Account
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
If Jonathan is earning 2% on an investment and inflation is increasing by 3%, what is happening to his purchasing power?
It's increasing
It's decreasing
It's not changing
Inflation and purchasing power are not related
How can you make money on stocks?
Buy them when the price is high and sell when the price is low
Interest
Dividends
Holding the stock at least 3 years
If interest rates rise, what will typically happen to bond prices?
Rise
Fall
Stay the same
Interest Rates are not related to bond prices
A _____ is a loan given to an organization while a _______ is partial ownership in the company.
bond, ETF
stock, bond
bond, stock
ETF, bond
What's the main difference between a Roth IRA and a Traditional IRA?
Roth IRAs have higher interest rates
Roth IRAs have you pay taxes upfront
Roth IRAs have higher fees
Roth IRAs are riskier investments
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
This is a characteristic human investment managers have that robo-advisors do not
Options trading
Personal touch
Futures trading
Beating the market
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
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
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
What is the benefit of a target date fund (TDF)?
TDFs come with lower fees
TDFs adjust assets allocation automatically based on retirement year
TDFs are insured against loss for the first 5 years
TDFs guarantee a certain rate of return by the target date
Which is NOT a good reason to buy a stock fund like the S&P 500?
Have a diversified portfolio
Have an investment with low fees
Don't have to monitor as closely as an actively managed account
You want to "beat the market" with your ROI
What is Social Security?
Social Security is a private retirement fund run by your company
Social Security is another name for a 401(k)
Social Security is a government run retirement program
Social Security is a program that matches your 401(k) contributions
Why is it important to start investing as soon as possible?
You take less risk when you are young, so money will be safe
You have more time for your money to compound
Investing is an easy way to make quick money
Fees on investments are cheaper when you are younger
