Financial Instruments and Investment Strategies Quiz

Test your knowledge with questions on stocks, bonds, derivatives, asset allocation, and more in this investment strategies quiz.

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Which of the following is a financial instrument?

Screwdriver

Stock

Hammer

Saw

What is the primary function of a stock?

To provide loans to companies

To represent ownership in a company

To guarantee a fixed return

To provide insurance

Which of the following is an example of a fixed-income security?

Stock

Bond

Mutual fund

Commodity

What does the term 'diversification' mean in investment?

Investing in a single asset class

Investing only in stocks

Spreading investments across various assets

Investing only in high-risk assets

What is the difference between a call option and a put option?

A call option gives the holder the right to buy, while a put option gives the holder the right to sell.

A call option gives the holder the right to sell, while a put option gives the holder the right to buy.

A call option gives the holder the right to buy, while a put option gives the holder the obligation to sell.

A call option gives the holder the right to sell, while a put option gives the holder the obligation to buy.

What is the purpose of a hedge fund?

To provide insurance against investment losses

To invest in high-risk assets only

To provide loans to companies

To pool capital from accredited investors

Which of the following is an example of a real asset?

Stock

Bond

Gold

Mutual fund

What is the key difference between an ETF and a mutual fund?

ETFs are traded on exchanges, while mutual funds are not.

Mutual funds are traded on exchanges, while ETFs are not.

ETFs can only be bought in large blocks, while mutual funds can be bought in any amount.

Mutual funds can only be bought in large blocks, while ETFs can be bought in any amount.

Which of the following is a derivative instrument?

Certificate of deposit

Common stock

Futures contract

Corporate bond

#10

What is the role of a custodian in investment?

To manage investment portfolios

To provide investment advice

To hold and safeguard financial assets

To execute trades on behalf of clients

#11

Which of the following is a key characteristic of a junk bond?

Low credit risk

High credit rating

High yield

Government-backed

#12

What is the purpose of a futures contract?

To provide a fixed income stream

To guarantee a minimum return on investment

To lock in a price for the future purchase or sale of an asset

To provide capital appreciation

Financial Instruments and Investment Strategies Quiz

Which of the following is a financial instrument?

What is the primary function of a stock?

Which of the following is an example of a fixed-income security?

What does the term 'diversification' mean in investment?

What is the difference between a call option and a put option?

What is the purpose of a hedge fund?

Which of the following is an example of a real asset?

What is the key difference between an ETF and a mutual fund?

Which of the following is a derivative instrument?

What is the role of a custodian in investment?

Which of the following is a key characteristic of a junk bond?

What is the purpose of a futures contract?

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