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WorksheetsInvesting Unit Exam Review
Total questions: 83
Worksheet time: 42mins
A stock represents partial ownership in a company.
True
False
Bonds are generally riskier than stocks.
True
False
A mutual fund pools money from many investors to buy a diversified portfolio of stocks or bonds.
True
False
Diversification helps reduce the overall risk of an investment portfolio.
True
False
The stock market always increases in value over short periods of time.
True
False
A dividend is a payment made by a company to its shareholders.
True
False
Investing is typically used for short-term financial goals.
True
False
A stock index tracks the performance of a group of companies.
True
False
An ETF (Exchange-Traded Fund) trades on the stock market like an individual stock.
True
False
A 401(k) is a retirement account offered by employers.
True
False
The lower the risk, the higher the potential return on investment.
True
False
A bull market is when the market is declining.
True
False
Capital gains occur when you sell an investment for more than you paid for it.
True
False
A Roth IRA allows your investments to grow tax-free.
True
False
Time in the market is more important than timing the market.
True
False
A stock ticker symbol is a unique series of letters representing a stock.
True
False
Compound interest helps your investments grow faster over time.
True
False
Market capitalization is a measure of a company’s size based on its stock price and number of shares.
True
False
Day trading is recommended for most beginner investors.
True
False
Index funds generally have higher fees than actively managed funds.
True
False
A portfolio is a collection of investments held by an individual or institution.
True
False
Inflation increases the purchasing power of your money over time.
True
False
A stop-loss order automatically sells a stock when it drops to a certain price.
True
False
The P/E ratio (Price-to-Earnings) is used to compare a company's stock price to its earnings.
True
False
Dollar-cost averaging is a strategy where you invest a fixed amount of money at regular intervals.
True
False
A blue chip stock refers to a large, lower-risk established company.
True
False
ESG investing considers environmental, social, and governance factors.
True
False
The Dow Jones Industrial Average includes 500 companies.
True
False
Investing in commodities means buying physical assets like gold or oil.
True
False
A limit order guarantees that a stock will be bought or sold immediately at the best available price.
True
False
What does it mean to invest in the stock market?
You lend money to the government
You buy ownership in a company
You store money in a bank account
You purchase real estate
What is a bond?
A form of stock
A loan you give to a company or government
A type of mutual fund
A checking account
What is diversification?
Buying one type of stock repeatedly
Spreading investments across various assets
Avoiding investing altogether
Selling all investments quickly
What is a dividend?
A fee for buying stocks
A payment made to shareholders from company profits
A tax on earnings
A bond repayment
What is a mutual fund?
A savings account
A pool of funds from many investors used to buy a diversified portfolio
A loan from a bank
A type of real estate
What is a stock index?
A type of bond
A tax calculator
A measurement of a specific set of stocks
A retirement plan
What does IRA stand for?
Individual Risk Agreement
Institutional Return Asset
Individual Retirement Account
Investment Resource Allocation
Which of the following best defines risk tolerance?
A guaranteed return on investment
The ability to choose the best stocks
The level of risk an investor is willing to take
A type of insurance
Which investment is typically considered the most risky?
Savings accounts
Stocks
Bonds
Certificates of deposit
What does "liquidity" mean in investing?
The potential return on investment
The time it takes for an investment to grow
How quickly and easily an asset can be converted into cash
The number of investors in a fund
What is an ETF?
A. A tax-free bond
B. An exchange-traded fund
C. An emergency trust fund
D. An employer tax form
What is the primary purpose of a 401(k)?
Buying a home
Saving for retirement
Paying student loans
Emergency savings
What does ROI stand for?
Rate of Increase
Reimbursement of Investment
Return on Investment
Real Option Interest
What is compound interest?
Interest earned on your salary
Interest charged by credit cards
Interest earned on both the principal and the interest previously earned
A tax refund
What is market capitalization?
The total amount of debt a company holds
The number of shares issued by a company
The total value of a company’s shares of stock
The market’s highest performing stocks
What is a target date fund?
A fund that aims for daily returns
A fund designed to grow and become more conservative as a specific retirement date approaches
A short-term savings account
A cryptocurrency investment
Which of the following is a reason to invest early?
To reduce taxes
To earn a salary
To avoid debt
To take advantage of compound growth over time
What is a bull market?
A market in which prices are rising or expected to rise
A market where stocks are delisted
A declining market
A bond-only market
What is a bear market?
A market with high IPO activity
A market with high trading volume
A market in which prices are falling or expected to fall
A government-controlled market
What is a capital gain?
Interest from a savings account
Income from a job
Profit from selling an investment for more than you paid
Tax refund
What is a stockbroker?
Someone who buys and sells real estate
Someone who trades only bonds
A person licensed to buy and sell stocks for investors
A bank loan officer
What is the S&P 500?
A bond rating
An index that tracks 500 large U.S. companies
A type of mutual fund
A retirement plan
What is a dividend yield?
The price of a bond
A ratio of annual dividends to stock price
The interest rate on a loan
A market risk measure
What does volatility mean in the context of investing?
Stable prices over time
High fees
The degree of variation in trading prices
Low liquidity
What is an IPO?
Income Percentage Offering
Interest Payout Option
Initial Public Offering
Indexed Portfolio Objective
What is a Roth IRA?
A checking account
A type of employer-sponsored 401(k)
A retirement account where contributions grow tax-free
A bond issued by the government
Which of these is considered a fixed-income investment?
Stocks
Bonds
Real estate
Cryptocurrency
What is a penny stock?
A mutual fund with low fees
A high-value bond
A stock that typically trades for less than $5 per share
A government security
What is an index fund?
A fund that focuses on real estate only
A savings account
A fund designed to track a market index
A fund that guarantees 10% returns
What does NASDAQ refer to?
A. A government agency
B. A tax bracket
C. An electronic stock exchange
D. A type of bond
What is a fiduciary?
A type of mutual fund
A financial advisor who is legally required to act in your best interest
A bond trader
A hedge fund manager
What is a margin account?
A checking account
An account for storing emergency savings
An investment account where you borrow money to invest
A federal student loan account
What is dollar-cost averaging?
Timing the market to buy low and sell high
Investing a fixed amount of money regularly regardless of market conditions
Buying only during market dips
Selling off high-performing assets
What is a stock split?
When a company issues bonds to investors
When a company splits into two separate companies
When a company increases the number of shares and lowers the price per share proportionally
When a company pays a special dividend
Which of the following is an example of an alternative investment?
Stock
Real estate
Mutual fund
CD
What is rebalancing in an investment portfolio?
Buying new stocks every day
Adjusting your portfolio to maintain your desired asset allocation
Selling all your investments
Choosing only low-risk investments
What is a REIT?
A type of bond
A retirement account
A real estate investment trust
A mutual fund for energy companies
What is the ex-dividend date?
The date a company pays a dividend
The date a company declares a dividend
The cutoff date to qualify for the next dividend payment
The date dividends are taxed
What is an annuity?
A stock with guaranteed returns
A loan from an investor
A contract that pays a fixed income for life or a set period
An annual report
Which of the following is an example of dollar-cost averaging?
Investing $100 once in a company
Investing $100 every month regardless of market conditions
Buying only when prices are high
Selling investments during downturns
What is a no-load mutual fund?
A fund with no taxes
A fund without management
A fund that doesn’t charge a sales fee
A government fund
What is a financial index?
government tax
A list of bond prices
A statistical measure of the stock market
A savings account
What is an asset class?
A college course
A specific type of investment (e.g., stocks, bonds, real estate)
A luxury stock
A mutual fund category
What is a load fee in mutual funds?
A monthly account charge
A tax on investments
A fee charged when buying or selling mutual fund shares
A bank penalty
What is a growth stock?
A stock that pays high dividends
A stock expected to grow at an above-average rate
A government bond
A declining company
Which of these is a short-term investment option?
Savings account
Real estate
Growth mutual fund
Target date fund
What does it mean to short a stock?
Buy and hold
Sell immediately
Borrow shares to sell and repurchase at a lower price
Invest only in cheap stocks
What is an investment-grade bond?
A junk bond
High risk bond
A bond rated low-risk by credit rating agencies
A government worker bond
What is a limit order?
an instruction to buy or sell a security at a specified price, or better.
an instruction to sell a security at a general price range.
A type of employer match
A bond mutual fund
Which of the following best explains the difference between a stock and a bond?
A stock represents ownership in a company, while a bond is a loan to the company or government.
A stock is a type of loan, while a bond represents ownership in a company.
Both stocks and bonds represent ownership in a company.
Both stocks and bonds are loans to the government.
If you received $1,000 as a graduation gift, which of the following would be the best way to invest it?
Put it in a savings account
Invest in stocks or mutual funds
Spend it on a vacation
Keep it as cash at home
The “Rule of 72” helps investors estimate how long it will take for an investment to double at a fixed annual rate of return. How does this rule assist investors in making decisions?
By providing a quick way to calculate doubling time for investments
By predicting stock market trends
By determining the exact future value of an investment
By identifying the best stocks to buy
Which of the following is an advantage of investing in a mutual fund?
Professional management
High risk
Lack of diversification
No liquidity
