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.
Stocks have outperformed every other type of investment because ______.
Choose wisely. There is only one correct answer.
Their returns are not fixed. Stocks have unlimited earning capacity.
2.
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.
3.
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.
4.
Compound interest is interest that is calculated only on the principal you invest.
Choose wisely. There is only one correct answer.
False. Compound interest is interest that is calculated on the principal you invest plus any interest you earn.
5.
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.
6.
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.