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.
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.
2.
When you invest in a bond you are guaranteed to receive your principal back because bonds have a maturity date and fixed term.
Choose wisely. There is only one correct answer.
False. Only US government bonds have a guaranteed return of principal if the bond is held to maturity.
3.
Social Security is meant to cover _______ of your retirement income needs.
Choose wisely. There is only one correct answer.
Some. While it can be an important piece of your income during retirement, most of your income should come from your retirement investments. Social Security was never intended to provide the majority of someone's retirement income.
4.
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.
5.
It is possible to buy shares of a mutual fund directly from the fund instead of through a broker.
Choose wisely. There is only one correct answer.
True. Although you can buy shares through a broker, most funds also let you buy shares directly from the funds themselves.
6.
As a general rule, which type of investment earns the highest rates?
Choose wisely. There is only one correct answer.
Stocks. As a rule, stocks earn the highest rates because their returns are not fixed. Of course, they also have the highest risks.