Course Catalog > Financial Planning > Courses
Financial Planning Courses: 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.
If an investor has a time horizon of 18 months to invest for a specific goal, they should consider investing what percentage of their investment dollars in stocks?
Choose wisely. There is only one correct answer.
0%. In general, 18 months is too short a time period to invest in stocks due to the chance for short-term price swings. You increase the risk of loss if you have a short timeline until needing to sell your stock investments. A general rule when buying stocks is that investors should be willing to hold stocks for five years or longer.
2.
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.
3.
Which bonds are subject to credit risk?
Choose wisely. There is only one correct answer.
Both municipal and corporate. Corporate and municipal bonds are subject to credit risk, and the value of their bonds can be impacted if the financial strength of the company or municipality declines.
4.
When inflation occurs, it means a dollar in the future will be worth more than a dollar today.
Choose wisely. There is only one correct answer.
False. Inflation causes the price of products and services to go up over time, so a dollar today will not buy the same amount of products and services in the future.
5.
What results when you sell an investment for more than you paid for it?
Choose wisely. There is only one correct answer.
A capital gain. It can be thought of as a gain on the capital invested.
6.
Cash investments, like a savings account, are often used to save for goals like _______.
Choose wisely. There is only one correct answer.
Emergency funds. Because of their easy access and safety, they are a good vehicle to add savings dollars to so you can pay for unexpected emergencies when they occur. Retirement is a long-term goal, and most investors are willing to take some risk with their money to have an opportunity to earn a higher return.