Quiz: Get Your Investing Mojo On!

1. Which of the following is the best reason to invest your savings?

To grow your money over time by capitalizing on the power of compounding interest.

To save up for a vacation to Hawaii.

To save up enough money for backstage tickets to a Selena Gomez concert.

To grow your money over time by capitalizing on the power of variable interest.

Correct!

Wrong!

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2. A financial investment is…

The purchase of a luxury car with the expectation that either the car will increase in value or you will start earning more money.

The purchase of a financial asset with the expectation of an increase in either the asset’s value or your future income.

Both A and B.

None of the above.

Correct!

Wrong!

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3. Which of the following is NOT a financial asset?

A bank deposit

A savings fund

Stocks

Bonds

Correct!

Wrong!

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4. Interest can be earned through…

Money deposited in bank accounts

Ownership of government bonds

Proceeds from a loan

All of the above

Correct!

Wrong!

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5. Diversifying your assets is paramount if you want to lower your investment risk.

True

False

Correct!

Wrong!

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6. Corporate stock is best defined as…

The purchase of ownership shares in a LLS.

The purchase of ownership shares in a sole corporation.

The purchase of ownership shares in a business.

The purchase of ownership shares in a Z corporation.

Correct!

Wrong!

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7. The price of a financial asset is determined by…

Buyers in a financial market

Sellers in a financial market

Investment bankers

The interaction of both buyers and sellers in a financial market

Correct!

Wrong!

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8. The formula for the real return on a financial investment is…

The rate of inflation – nominal return

Nominal return – rate of inflation

Rate of inflation – nominal return – net profit

None of the above

Correct!

Wrong!

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9. The SEC is short for…

Securities and Excel Commission

Stocks and Exchange Commission

Securities and Exchange Commission

Stocks and Equity Commission

Correct!

Wrong!

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10. Long-term investments typically have a lower rate of return than short-term investments.

True

False

Correct!

Wrong!

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11. Financial markets are regulated by which of the following agencies?

Federal Reserve

Securities and Exchange Commission

Both A and B

None of the above

Correct!

Wrong!

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12. The rate of return on financial investments is comprised of…

Interest payments, dividends, and capital appreciation

Interest payments and dividends

Interest payments and capital appreciation

Dividends and capital appreciation

Correct!

Wrong!

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