Multiple Choice Questions

What is the primary reason to issue stock?
  • b. the value of the investment may be hard to predict.
  • b. To raise money to grow the company
  • b. The issuer will pay you back, plus interest.
  • b. To build new roads or bridges.
Generally speaking, the _______ the risk, the _______ the potential return or loss.
  • c. Savings Accounts
  • d. Both A and B
  • b. higher; higher
  • d. All of the above
When you buy a ____ , you are loaning money to an organization.
  • d. Both A and B
  • b. Stocks allow investors to own a portion of the company; bonds are loans to thecompany.
  • b. Bond
  • c. At the earliest possible date.
________ are typically comprised of a mix of ________ and ________.
  • b. To raise money to grow the company
  • c. At the earliest possible date.
  • c. Mutual funds; stocks; bonds
  • b. To build new roads or bridges.
If an employer does not offer a retirement plan, what might be another way to save for retirement?
  • b. higher; higher
  • d. All of the above
  • d. Both A and B
  • b. Bond
If an investment is considered "volatile", it means...
  • b. The issuer will pay you back, plus interest.
  • b. To raise money to grow the company
  • a. It helps you to balance your risk across different types of investments.
  • b. the value of the investment may be hard to predict.
When it comes to investing, what is the typical relationship between risk and return?
  • a. A bond typically pays a fixed, predictable amount of interest each year.
  • c. Treasury bond − Diversified mutual fund - Stock
  • b. The greater the potential risk, the greater the potential return.
  • b. The issuer will pay you back, plus interest.
Which of the following correctly orders the investments from LOWER risk to HIGHERrisk?
  • b. The greater the potential risk, the greater the potential return.
  • a. A portfolio of with a high percentage of stocks.
  • c. Treasury bond − Diversified mutual fund - Stock
  • c. A portfolio made up of 60% stocks, 30% mutual funds, and 10% Treasury bonds.
What are dividends?
  • b. The issuer will pay you back, plus interest.
  • c. A distribution of a small percentage of profits to shareholders.
  • b. By investing their earnings back into their original investment
  • c. A portfolio made up of 60% stocks, 30% mutual funds, and 10% Treasury bonds.
Diversification is important in investing because...
  • b. Stocks allow investors to own a portion of the company; bonds are loans to thecompany.
  • b. the value of the investment may be hard to predict.
  • b. By investing their earnings back into their original investment
  • a. It helps you to balance your risk across different types of investments.
When might be the best time to start saving for retirement?
  • c. Savings Accounts
  • b. To build new roads or bridges.
  • c. At the earliest possible date.
  • b. To raise money to grow the company
Which investment type typically carries the least risk?
  • c. Savings Accounts
  • c. At the earliest possible date.
  • d. All of the above
  • b. Stocks allow investors to own a portion of the company; bonds are loans to thecompany.
Why might a town decide to issue bonds?
  • b. To raise money to grow the company
  • c. At the earliest possible date.
  • b. The issuer will pay you back, plus interest.
  • b. To build new roads or bridges.
How can investors receive compounding returns?
  • b. The issuer will pay you back, plus interest.
  • b. By investing their earnings back into their original investment
  • b. the value of the investment may be hard to predict.
  • b. To raise money to grow the company
Which of the following would be considered the highest risk portfolio?
  • c. Treasury bond − Diversified mutual fund - Stock
  • c. A portfolio made up of 60% stocks, 30% mutual funds, and 10% Treasury bonds.
  • a. A portfolio of with a high percentage of stocks.
  • b. Stocks allow investors to own a portion of the company; bonds are loans to thecompany.
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Multiple Choice Questions
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