Quiz: Get Your Investing Mojo On!

1. Which of the following is the primary reason to invest?

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

B. To save up for a vacation

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

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

Correct!

Wrong!

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2. A financial asset is…

A. An tangible investment such as a building

B. An asset that has no tangible value, such as a stock or a bond

C. Any cash asset

D. All of the above

Correct!

Wrong!

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3. Which of the following is a financial asset?

A. A bond

B. A Certificate of Deposit (CD)

C. Stocks

D. All of the above

Correct!

Wrong!

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4. Interest can be earned through…

A. Money deposited in bank accounts

B. Ownership of government bonds

C. Earnings from a loan

D. All of the above

Correct!

Wrong!

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

A. Owning multiple classes of assets spreads your risk against failure of any one asset class

B. Owning multiple assets is safer than owning one

C. It makes your investments safer but doesn’t lower your risk

D. A diverse portfolio doesn’t have lower risk

Correct!

Wrong!

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

A. Buyers in a financial market

B. Sellers in a financial market

C. Investment bankers

D. The interaction of both buyers and sellers in a financial market

Correct!

Wrong!

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

A. The rate of inflation – nominal return

B. Nominal return – rate of inflation

C. Rate of inflation – nominal return – net profit

D. None of the above

Correct!

Wrong!

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8. The rate of return on financial investments may consist of…

A. Interest payments, dividends, and capital appreciation

B. Interest payments and dividends

C. Interest payments and capital appreciation

D. Dividends and capital appreciation

Correct!

Wrong!

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