3.1 Investing Quiz

What is the goal of investing?

• Increasing future income

• Reducing risk

• Paying off debt

• Saving for short-term goals

Which of the following is an example of a long-term goal accomplished by investing?

• Buying a car

• Taking a vacation

• Paying off credit card debt

• Retiring in thirty years

What is the rate of return?

• The total amount of money invested

• The percentage increase in the value of an investment

• The risk associated with an investment

• The time it takes for an investment to mature

What is investment risk?

• The uncertainty regarding the outcome of a situation or event

• The possibility that an investment will fail to pay the expected return

• The rise in the general level of prices

• The danger that money won't be worth as much in the future

When should inflation risk be a concern?

• With short-term investments

• With long-term investments

• With low-risk investments

• With high-risk investments

What is a stock?

• A form of lending to a company or the government

• A share of ownership in a company

• A mutual fund that invests in a diversified portfolio

• A group of similar stocks and bonds

What is a bond?

• A form of lending to a company or the government

• A share of ownership in a company

• A mutual fund that invests in a diversified portfolio

• A group of similar stocks and bonds

What is a mutual fund?

• A form of lending to a company or the government

• A share of ownership in a company

• A portfolio of diversified investments that are purchased by a pooling of money from investors.

• A group of similar stocks and bonds

What is an index fund?

• A form of lending to a company or the government

• A share of ownership in a company

• A mutual fund that invests in a diversified portfolio

• A mutual fund that invests in stocks and bonds that make up an index

What is real estate?

• A form of lending to a company or the government

• A share of ownership in a company

• Residential or commercial property or land

• A group of similar stocks and bonds