What is the relationship between risk and return on investment?

The higher the risk, the higher the likely return

The lower the risk, the higher the likely return

The higher the risk, the lower the likely return

There is no relationship between risk and the return

The main advantage of diversification as an investment policy is that it

Reduces the risk involved in investing

Increases the yield of investments

Reduced the effects of inflation on investments

What is the difference between a stock and a bond?

Stocks show ownership and bonds are a debtor/creditor relationship

Stocks show primary owners of a corporation, while bonds are secondary owners of a corporation

Stocks show ownership in a business, while bonds are ownership in a government

Nothing, they are exactly the same

Why are mutual funds a wise investment?

Your money is invested in a wide variety of stocks and/or bonds

Your money is invested in one very profitable stock

Your money is guaranteed to earn a fixed rate of interest

None of the above; no one should ever invest in mutual funds

When should you start saving for retirement?

When you get your first full time job

A company’s market capitalization (size) is calculated by which formula?

Stock price multiplied by the number of shares outstanding

Stock price divided by earnings per share

The number of shares outstanding divided by the stock price

Number of shares outstanding plus the stock price

What happens to shareholders if a company goes bankrupt?

Shareholders lose their entire investment in the company

Shareholders are liable for their portion of company debt

Shareholders are refunded their entire investment in the company

Shareholders also have to declare bankruptcy

George received a dividend from the company in which he is a stockholder. A dividend is

Distribution of part of the company’s profit

Profit from the sales of some of his shares of stock

Required by the SEC to be given to shareholders

Interest on his shares of preferred stock

The ease with which you can retrieve your cash from an investment

A measurement of the liquid amount of cash in your bank account

The ease with which the government protects your accounts

Ability to turn metal into gold

The time value of money refers to the concept that money:

Received today is worth more than the same amount of money received in the future

Changes in value along with interest rates

Money will double in value over seven years

Is the foundation for developing a financial plan

What do the bear and the bull markets stand for?

The bear means stocks are falling and the bull means stocks are going up

They are signs that the Stock Market is opened and closed

The bear means stocks are rising and the bull means stocks are falling

They are meaningless mascots meant to only sell t-shirts and stuffed animals

If a single woman buys a home for $200,000 and sells her home after living in it for ten years for $500,000, how much money can she keep tax free?

None they must pay taxes on their capital gain.

Investment Knowledge Quiz

Authored by Stefan Jenczewski

Other

12th Grade

Used 16+ times

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49 questions

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MULTIPLE CHOICE QUESTION

30 sec • 1 pt

A capital loss is the sale of an investment for less than its purchasing price.

True

False

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Government bonds have a higher risk than stocks.

True

False

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

There are investment options even riskier than stocks.

True

False

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

People who invest in the stock market will automatically make money.

True

False

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Stockholders can only make money by collecting dividends.

True

False

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Utility Company stocks are defensive stocks.

True

False

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Series EE bonds are guaranteed to triple in 20 years.

True

False

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Investment Knowledge Quiz

A capital loss is the sale of an investment for less than its purchasing price.

Government bonds have a higher risk than stocks.

There are investment options even riskier than stocks.

People who invest in the stock market will automatically make money.

Stockholders can only make money by collecting dividends.

Utility Company stocks are defensive stocks.

Series EE bonds are guaranteed to triple in 20 years.

Stocks are more liquid than real estate.

Cryptocurrency is recommended by most financial investors over stock.

Of the following investments, the one with the most predictable income is

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