Test: Saving and Investing

Which term describes investment funds run by a portfolio manager who attempts to "beat the market" by actively selecting specific investments?

• Index Funds

• Actively Managed Funds

• Blended Funds

• Exchange Traded Funds (ETFs)

What is the process of dividing your investment portfolio among different asset categories (e.g., stocks, bonds, cash) based on your risk tolerance and investment horizon?

• Diversification

• Asset Allocation

• Rebalancing

• Leverage

What is the term for the profit or loss on an investment over a single one-year period, expressed as a percentage?

• Annual Rate of Return

• Expense Ratio

• Capital Gain

• Real Rate of Return

Which term describes an increase in the value of an asset, such as a stock whose price per share has risen?

• Dividend

• Appreciation (Stock)

• Capital Gain

• Net Asset Value (NAV)

What is a debt instrument in which an investor loans money to an entity (corporate or government) for a defined period at a fixed or variable interest rate?

• Bonds

• Common Stock

• Dividend

• Preferred Stock

Which of the following describes physical assets like art or coins whose value is based on rarity and demand, making them a highly speculative investment?

• Collectibles

• Real Estate

• Treasuries

• Preferred Stock

Which type of stock represents ownership in a corporation and typically provides the holder with voting rights and benefits from the company's growth?

• Preferred Stock

• Corporate Bonds

• Savings Bonds

• Common Stock

What are debt securities issued by a corporation to raise money?

• Corporate Bonds

• Treasuries

• Dividends

• Common Stock

Ava, Michael, and James each want to protect their investments from big losses. Which strategy should they use to spread their money across different asset classes, sectors, and geographies to minimize risk?

• Leverage

• Asset Allocation

• Diversification

• Rebalancing

Zoe and Arjun are comparing different mutual funds and ETFs. They notice that each fund charges an annual fee to cover management and operating costs, which is expressed as a percentage of their investment. What is this fee called?

• Annual Rate of Return

• Expense Ratio

• Load

• Real Rate of Return