Everfi Investing: Question Preview (ID: 20487)

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Are Issued by a state,and are tax exempt.
a) Bonds
b) Municipal Bonds
c) Mutual fund
d) Blue chip Stocks

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:

Diversification is important in investing because...
a) It helps you to balance your risk across different types of investments.
b) It increases your overall risk, which guarantees that you will make more money.
c) It ensures that you only make low-risk investments.
d) It helps you gain the highest rate of return despite any risks.

If an investment is considered “volatile”, it means...
a) the investment will experience rapid growth over time.
b) the value of the investment may be hard to predict.
c) the investment is high-risk, and will its price will increase quickly.
d) the investment is undervalued and may increase over time.

Which of the following correctly orders the investments from LOWER risk to HIGHER risk?
a) Treasury bond − Stock − Diversified mutual fund
b) Stock − Treasury bond − Diversified mutual fund
c) Treasury bond − Diversified mutual fund – Stock
d) Diversified mutual fund − Treasury bond − Stock

When it comes to investing, what is the typical relationship between risk and return?
a) The greater the potential risk, the smaller the potential return.
b) The greater the potential risk, the greater the potential return.
c) There is no relationship between risk and return.
d) It depends on the investment mix in your portfolio.

What is the primary reason to issue stock?
a) To help investors earn a higher rate of return
b) To raise money to grow the company C
c) To distribute the risk of bankruptcy across more investors
d) To increase investor awareness of the company

Which best describes the difference between stocks and bonds?
a) Stocks allow investors to share in profits; bonds make investors responsible for company debts.
b) Stocks allow investors to own a portion of the company; bonds are loans to the company. C
c) Stocks pay interest to investors throughout the year; bonds only pay interest at fixed times during the year.
d) Stocks are a more reliable investment; bonds tend to be more volatile.

When you buy a ____ , you are loaning money to an organization.
a) Stock
b) Bond
c) Mutual Fund
d) Index Fund

How can investors receive compounding returns?
a) By selecting a savings account that has a higher interest rate
b) By investing their earnings back into their original investment
c) By transferring their earnings into a high-risk investment
d) By diversifying their investment portfolio

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