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Everfi Investing
Test Description: Invetsing
Instructions: Answer all questions to get your test result.
1) How can investors receive compounding returns?
A
By investing their earnings back into their original investment
B
By diversifying their investment portfolio
C
By transferring their earnings into a high-risk investment
D
By selecting a savings account that has a higher interest rate
2) When you buy a ____ , you are loaning money to an organization.
A
Index Fund
B
Stock
C
Mutual Fund
D
Bond
3) Which best describes the difference between stocks and bonds?
A
Stocks allow investors to own a portion of the company; bonds are loans to the company. C
B
Stocks pay interest to investors throughout the year; bonds only pay interest at fixed times during the year.
C
Stocks allow investors to share in profits; bonds make investors responsible for company debts.
D
Stocks are a more reliable investment; bonds tend to be more volatile.
4) What is the primary reason to issue stock?
A
To increase investor awareness of the company
B
To raise money to grow the company C
C
To help investors earn a higher rate of return
D
To distribute the risk of bankruptcy across more investors
5) When it comes to investing, what is the typical relationship between risk and return?
A
It depends on the investment mix in your portfolio.
B
The greater the potential risk, the greater the potential return.
C
The greater the potential risk, the smaller the potential return.
D
There is no relationship between risk and return.
6) Which of the following correctly orders the investments from LOWER risk to HIGHER risk?
A
Treasury bond − Diversified mutual fund – Stock
B
Stock − Treasury bond − Diversified mutual fund
C
Diversified mutual fund − Treasury bond − Stock
D
Treasury bond − Stock − Diversified mutual fund
7) If an investment is considered “volatile”, it means...
A
the investment is high-risk, and will its price will increase quickly.
B
the investment is undervalued and may increase over time.
C
the investment will experience rapid growth over time.
D
the value of the investment may be hard to predict.
8) Diversification is important in investing because...
A
It ensures that you only make low-risk investments.
B
It increases your overall risk, which guarantees that you will make more money.
C
It helps you gain the highest rate of return despite any risks.
D
It helps you to balance your risk across different types of investments.
9) Using a brokerage firm, a qualified investor buys 1000 shares of a common stock at $50 a share on 50% margin. This means that the
A
more of the same stock
B
Are exempt from state and local taxes
C
brokerage firm is lendingmargin the investor 50% of the money.
D
A pharmacy is to drugs as the American Stock Exchange is to:
10) Are Issued by a state,and are tax exempt.
A
Blue chip Stocks
B
Municipal Bonds
C
Mutual fund
D
Bonds
*select an answer for all questions
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