Strategy Beginner:
Introduction to Investment Strategy
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Choose wisely. There is only one correct answer to each question.
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1.
_______ are taxed at a relatively low rate if you hold your investments long enough.
Choose wisely. There is only one correct answer.
Tax-deferred investments
Interest-income investments
Pre-tax savings
Capital gains
Capital gains. Long-term capital gains are taxed at a lower rate to encourage investment.
2.
Inflation affects _______.
Choose wisely. There is only one correct answer.
The value of investments
Interest rates
Both the value of investments and interest rates
Neither the value of investments nor interest rates
Both the value of investments and interest rates. Inflation affects both, which is why many investors watch it carefully.
3.
The greater potential return that investments offer in return for accepting greater risk is called ________.
Choose wisely. There is only one correct answer.
Risk tolerance
Risk premium
Risk aversion
Principal risk
Risk premium. This is the "reward" for taking on risk.
4.
If you might need to borrow against your principal, you need _______.
Choose wisely. There is only one correct answer.
An appreciation investment
An income investment
A collateral investment
An inflation hedge investment
A collateral investment. A collateral investment can be used to secure a loan.
5.
If you might need to use your principal soon, which aspect(s) of trading would especially concern you?
Choose wisely. There is only one correct answer.
Maturity date
Tracking value
Minimum investment
Maturity date and minimum investment
Maturity date and minimum investment. Minimum investment determines how much of your principal will be tied up, and the maturity date how long.
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DONE