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 are some reasons why people invest their money?
Choose wisely. There is only one correct answer.
All of the above. These -- and many others -- are the most common reasons people invest their money.
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.
What is the most commonly used type of cash investment?
Choose wisely. There is only one correct answer.
Savings account. A savings account is made up of cash you deposit, but unlike the cash in your pocket, it pays some interest to you.
4.
Investment diversification can be accomplished by owning _______.
Choose wisely. There is only one correct answer.
Small, mid-sized, and large company stocks. Owning many different-sized companies provides diversification because they have different characteristics and generally perform differently based on the economic and market conditions.
5.
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.
6.
As a rule, the longer your time horizon is for investing, the more aggressive you can be with your investments.
Choose wisely. There is only one correct answer.
True. This is due to the fact that you will have more time to recoup losses.