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.
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.
2.
What ultimately causes stock prices to rise?
Choose wisely. There is only one correct answer.
Companies increase their profits in the future. Ultimately, a rise in profits causes stocks to grow in value, which leads to rising stock prices.
3.
What is asset allocation?
Choose wisely. There is only one correct answer.
Determining how much money to spend on different types of assets. Asset allocation is a big term, but it refers to how we distribute our money among investments.
4.
During your working years, what do you need your investments to do the most of for you?
Choose wisely. There is only one correct answer.
Grow. If you are like most people, you will need your investments to grow so that when you are older, you can withdraw sufficient money from them to live on.
5.
If you own a bond with an interest rate of 4% and rates increase to 5%, what will happen to the value of the bond if you try to sell it?
Choose wisely. There is only one correct answer.
It will decrease. If interest rates rise, the price of the bond on the market will decline because investors will seek bonds with these new, higher rates. This occurs with US government bonds too, and if you were to sell it before it matures, you would sell for less than you invested. If you hold the US government bond until its maturity date, you will receive all of your principal back.
6.
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.