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 time horizon?
Choose wisely. There is only one correct answer.
The length of time over which you will be investing your money. Your time horizon will be a factor when choosing investments.
2.
The interest you earn on a savings account or similar cash investment is not taxed as ordinary income by the federal government.
Choose wisely. There is only one correct answer.
False. Interest is taxed as ordinary income at both the state (if you are required to pay state taxes) and federal levels.
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.
When you buy shares of stock in a company, you _______.
Choose wisely. There is only one correct answer.
All of the above. Owning stock comes with all these benefits, though it should be noted that dividends are not always guaranteed to be paid.
5.
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.
6.
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.