Financial Literacy/Education

Question 1

What is the primary goal of investing?

Answer 1

To grow wealth over time.

Question 2

True or False: A higher risk typically leads to higher potential returns in investments.

Answer 2

True.

Question 3

Fill in the blank: The process of allocating resources, usually money, to generate income or profit is called ______.

Answer 3

investing.

Question 4

What is diversification in the context of investments?

Answer 4

The practice of spreading investments across various financial assets to reduce risk.

Question 5

Which of the following is considered a fixed-income investment? A) Stocks B) Bonds C) Real Estate

Answer 5

B) Bonds.

Question 6

What does ROI stand for?

Answer 6

Return on Investment.

Question 7

True or False: Mutual funds allow investors to pool their money to invest in a diversified portfolio.

Answer 7

True.

Question 8

What is the difference between primary and secondary markets?

Answer 8

The primary market is where new securities are issued, while the secondary market is where existing securities are traded.

Question 9

What is an index fund?

Answer 9

A type of mutual fund that aims to replicate the performance of a specific market index.

Question 10

Fill in the blank: ______ is the practice of buying and holding investments for a long period, regardless of market fluctuations.

Answer 10

Buy and hold.

Question 11

What is the significance of the time value of money?

Answer 11

It states that money available today is worth more than the same amount in the future due to its earning potential.

Question 12

What is a stock?

Answer 12

A share in the ownership of a company.

Question 13

True or False: A bear market is characterized by rising stock prices.

Answer 13

False.

Question 14

What is asset allocation?

Answer 14

The process of dividing investments among different asset categories, such as stocks, bonds, and cash.

Question 15

Which investment is typically more volatile: A) Bonds B) Stocks

Answer 15

B) Stocks.

Question 16

What does the term ‘liquidity’ refer to in finance?

Answer 16

The ease with which an asset can be converted into cash.

Question 17

Fill in the blank: The ______ is the amount of money an investor earns from an investment, expressed as a percentage of the initial investment.

Answer 17

return.

Question 18

What is a dividend?

Answer 18

A portion of a company’s earnings distributed to shareholders.

Question 19

True or False: Real estate is considered a tangible asset.

Answer 19

True.

Question 20

What is the purpose of a financial plan?

Answer 20

To outline an individual’s financial goals and the strategies to achieve them.

Question 21

What does the term ‘market capitalization’ refer to?

Answer 21

The total market value of a company’s outstanding shares of stock.

Question 22

Which of the following is NOT a type of investment? A) Stocks B) Bonds C) Insurance

Answer 22

C) Insurance.

Question 23

Fill in the blank: ______ risk is the possibility of losing some or all of an investment’s value.

Answer 23

Investment.

Question 24

What is a capital gain?

Answer 24

The profit from the sale of an asset when its selling price exceeds its purchase price.

Question 25

True or False: An expense ratio measures the costs associated with managing a mutual fund.

Answer 25

True.

Question 26

What is the purpose of a budget in money management?

Answer 26

To plan and track income and expenses.