WorksheetsInvestment Basics Quiz
Total questions: 10
Worksheet time: 5mins
What is a financial investment?
A strategy to earn money without risk
The quickest way to make a lot of money
Gambling in the hopes that you’ll save enough for retirement
Purchasing an asset you think will increase in value
Which of the following are investments?
New headphones
A new car
Purchase of a government bond
Pizza for a pizza party
What are capital gains?
Quarterly or annual interest payments
When business or land is sold for more than its original purchase price
Periodic payments in which a company returns some profit to shareholders
The taxes owed on investment returns
What is a growth stock?
A stock for a company that is expected to expand faster than similar companies
A stock that is considered underpriced based on the company’s performance
A stock that regularly pays out a dividend each quarter
A stock that tends to move in an opposite direction than the economy overall
What is the difference between a stock and a bond?
Stocks pay interest; bonds pay dividends
Stocks are issued by governments; bonds are issued by banks
Stocks are a piece of a company; bonds pay interest
Stocks are lower risk; bonds have a lower return
How can you reduce the risk of losing money in your stock portfolio?
Focus your investments on one reliable stock
Make sure that you only invest in large companies
Use social media to find investment tips
Diversify the investments in your portfolio
Mutual funds:
Usually require a minimum amount of money to invest
Are only open to wealthy investors
Usually do not have any fees or expenses
Have a price that changes several times a day
Making sure you know how much tax you may owe on an investment is the first step to keeping as much of your money as possible. Which of the following would require you to pay a long-term capital gain?
You purchased a stock for $50 per share and you sold it within three months for $35 per share
You purchased an ETF for $100 per share and sold it two years later for $125 per share
You purchased a high risk growth stock for $75 per share and sold it six months later for $75 per share
You purchased a stock for $35 per share, you have not sold it yet, and the stock is now worth $40 per share
Which of the following accounts allows for tax-free withdrawals in retirement?
Roth IRA
Traditional IRA
401(k)
529
Why might someone want to invest in a Roth IRA?
Because Roth IRAs are offered by employers, who often will match contributions
Roth IRAs allow you to choose between pre-tax and after-tax contributions
Because you deposit after-tax dollars into a Roth IRA, you get to grow your money tax free
Roth IRAs are lower risk than other types of retirement accounts
