#1
Which of the following is a characteristic of a mutual fund?
Diversification of investment across multiple securities
ExplanationMutual funds offer diversification across securities.
#2
Which of the following is NOT a factor to consider when evaluating investment options?
Current fashion trends
ExplanationCurrent fashion trends are not relevant to investment evaluation.
#3
Which of the following is a characteristic of a bond?
Typically offers a fixed interest rate
ExplanationBonds usually offer a fixed interest rate.
#4
What does the term 'ROI' stand for in the context of investments?
Return on Investment
ExplanationROI stands for Return on Investment.
#5
Which of the following is NOT a type of investment account?
Checking account
ExplanationChecking accounts are not investment accounts.
#6
Which of the following investment options typically offers the highest potential returns?
Stocks
ExplanationStocks offer high potential returns.
#7
What is the main advantage of investing in real estate compared to other investment options?
Potential for steady income through rent
ExplanationReal estate provides steady income through rent.
#8
When considering risk in investments, which of the following is generally true?
Higher-risk investments may provide higher returns, but with increased risk of losses
ExplanationHigher-risk investments offer higher returns with higher loss potential.
#9
What is the concept of 'diversification' in investing?
Spreading investments across different assets to reduce risk
ExplanationDiversification reduces risk by spreading investments.
#10
What is the purpose of an index fund?
To track the performance of a specific index
ExplanationIndex funds track specific index performances.
#11
Which of the following is NOT a type of investment risk?
Guaranteed returns
ExplanationGuaranteed returns are not an investment risk.
#12
What is the primary difference between an ETF and a mutual fund?
ETFs are traded on exchanges like stocks, while mutual funds are not
ExplanationETFs are exchange-traded, while mutual funds are not.
#13
What is the key benefit of a 401(k) retirement plan?
Employer match on contributions
Explanation401(k) plans offer employer matches.
#14
What is the general rule of thumb for asset allocation based on age?
Invest more aggressively when young and more conservatively as you age
ExplanationInvest aggressively when young; conservative as you age.
#15
What is the main advantage of a 403(b) retirement plan?
Employer match on contributions
Explanation403(b) plans offer employer matches.
#16
Which of the following is a characteristic of a 457(b) retirement plan?
Available only to government employees
Explanation457(b) plans are for government employees only.