Choose wisely. There is only one correct answer to each question.
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1.
If you buy a stock, it will definitely increase in value over time.
False. Though stocks on the whole have increased in value substantially over the decades, we should not say that a given stock will definitely increase in value over time. Some stocks simply don't.
2.
Which of the following investments are the most volatile in their pricing?
Stocks. Stocks are the most volatile. Over the long term, stocks have a higher return than bonds or savings accounts. But this volatility means that over the short term, other types of investments may significantly outperform stocks.
3.
Over the long term, which investments provide the lowest real (inflation adjusted) returns?
Savings accounts. Savings accounts provide the lowest real (or inflation adjusted) returns over the long term.
4.
Which of the following investments provide the biggest long-term returns?
Stocks. Of the types of investments listed, stocks provide the biggest long-term returns. In attempting to reach your financial goals in life, maximizing the return on your investment dollars is key.
5.
Buying shares of stock in a company gives you ownership in that company.
True. Stock is about ownership (also called equity) and all the benefits of that ownership.
