Strategy Beginner:
Long-Term Investing
Test your knowledge
Choose wisely. There is only one correct answer to each question.
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1.
Growth stocks come from companies whose earnings are expected to _______.
Choose wisely. There is only one correct answer.
Grow slower than the market average
Grow faster than the market average
Grow at the same rate as the market average
Grow faster than the market average. The stock of companies with high earnings are valued highly in the marketplace, and thus grow greatly in value.
2.
You should take inflation into account when buying long-term investments because _______.
Choose wisely. There is only one correct answer.
Inflation erodes purchasing power over time
Inflation only affects long-term investments to begin with
Neither of the above
Inflation erodes purchasing power over time. This is why you should consider the investment returns you can expect to get.
3.
The more an investments price changes, _______.
Choose wisely. There is only one correct answer.
The higher its volatility
The lower its volatility
The lower its capital gains taxes
The higher its volatility. Price changes and volatility are often found together in certain investments.
4.
Dividends are _______.
Choose wisely. There is only one correct answer.
Shared company profits
Designed to reduce taxes
Tax shelters
Shared company profits. Dividends are investors cuts of company profits.
5.
Which of the following weathers market downturns best, on average?
Choose wisely. There is only one correct answer.
Long-term investments
Short-term investments
Both weather down markets equally
None of the above
Long-term investments. The longer you invest, the more likely you will be able to weather market downturns.
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DONE