Basics Beginner: Investments

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
During your working years, what do you need your investments to do the most of for you?
Choose wisely. There is only one correct answer.
Grow. If you are like most people, you will need your investments to grow so that when you are older, you can withdraw sufficient money from them to live on.
2.
Stocks have outperformed every other type of investment because ______.
Choose wisely. There is only one correct answer.
Their returns are not fixed. Stocks have unlimited earning capacity.
3.
When a bond matures, what happens to it?
Choose wisely. There is only one correct answer.
The money gets paid back to you. When a bond matures (that is, when its term ends), the money in it gets paid back to you, along with any interest that is yet due.
4.
What is a mutual fund?
Choose wisely. There is only one correct answer.
A ready-made portfolio of securities investments. Mutual funds are convenient because the investments in them have already been selected. You and many others invest your money into the fund and thereby participate in the gains and losses of the fund's investments.
5.
The interest you earn on a savings account is taxed differently from the money you earn at your job.
Choose wisely. There is only one correct answer.
False. It is taxed the same way, that is, as ordinary income.
6.
What is asset allocation?
Choose wisely. There is only one correct answer.
Determining how much money to spend on different types of assets. Asset allocation is a big term, but it refers to how we distribute our money among investments.