Investing Test

Question 0

A type if growth investment

Answer 0

Stocks

Question 1

A type of income investment

Answer 1

Savings account

Question 2

A system where the public can buy it sell stock

Answer 2

Stock exchange

Question 3

Something of value that can be changed into cash

Answer 3

Asset

Question 4

Earning interest on previously earned interest plus the principal amount

Answer 4

Compound interest

Question 5

Spreading your money among different savings and investments

Answer 5

Diversification

Question 6

Historical long term annual average rate of inflation

Answer 6

3%

Question 7

The basic rule of risk to return relationship

Answer 7

The higher the risk the higher the rate of return

Question 8

The lowest investment risk while still growing in value

Answer 8

Savings account

Question 9

True/false- mutual funds are convenient and professionally managed

Answer 9

FALSE

Question 10

True/False- Mutual funds offer guaranteed returns

Answer 10

FALSE

Question 11

True/False- buying a car to get to work is an investment

Answer 11

FALSE

Question 12

If you buy stock in a company can you expect to have control in what is produced at that company

Answer 12

NO

Question 13

What are the 3 steps to building wealth

Answer 13

1. Have enough income to invest
2. Make a plan
3. Put money to work by investing

Question 14

When is the best time to start investing

Answer 14

Sooner rather than later

Question 15

How have most people gained their fortunes

Answer 15

Planning. Investing. Inculminating Assets of value

Question 16

What is the difference between saving and investing

Answer 16

Saving-Setting aside money to use later

Investing- using money to buy something to make money

Question 17

Why should one diversify their investments

Answer 17

Minimize your risk of loosing money. Money is invested in different types of investments

Question 18

Why should one save their money in bank rather than under their mattress

Answer 18

1. Insured 2. Safety 3. Invest earned 4. Less temped to spend if it’s in bank

Question 19

Other than diversifying investments, what are other recommended practices

Answer 19

Develop investment strategies, start now or early, invest for the long term, invest regularly, do your hw before investing, determine what your investing

Question 20

What strategies should a new investor avoid

Answer 20

Flipping stock, blind trust in resources of information, getting emotional, relying on only past performances, don’t borrow money to invest, holding 1 type of investment

Question 21

What is the dollar cost averaging investment strategy

Answer 21

Invest a set amount of money at regular intervals, invest consistently

Question 22

How can a minor buy stocks and bonds

Answer 22

Custodian account set up by your parents/ guardians

Question 23

Explain the time value concept

Answer 23

The value of money decreasing due to inflation

Question 24

Put these in highest to lowest 
Balanced mutual fund
Certificate of deposit 
Money market deposit account
Start up stock
Us savings bond

Answer 24

Start up stock
Balanced mutual fund 
Us savings bond 
Certificate of deposit 
Money market deposit account

Question 25

Rank highest to lowest 
Mutual fund 
Collectible
Stock (in 1 company) 
Savings account
Corporate bond

Answer 25

Collectible 
Stock (in 1 company) 
Mutual fund
Corporate bond
Savings account