Financial Investment and Return Analysis Quiz

Bonds are generally considered less risky due to their fixed income nature and lower volatility compared to stocks.

ROI measures the profitability of an investment relative to its cost.

Diversification spreads investments across different assets to reduce the impact of any single investment's performance on the overall portfolio.

Diversification involves investing in a variety of assets to lower overall risk.

Blue chip stocks are shares of well-established, financially sound, and reputable companies with a history of stable performance.

ETFs are investment funds traded on stock exchanges, holding assets such as stocks, commodities, or bonds, and offering diversified exposure to various markets.

Compound interest formula calculates the total amount of a principal sum of money after a certain period, including interest.

Sharpe ratio evaluates the return of an investment relative to its risk.

Bond prices move inversely to interest rates; as rates rise, bond prices fall, and vice versa.

P/E ratio compares a company's current share price with its earnings per share, indicating its valuation relative to earnings.

Certificates of Deposit (CDs) are a type of savings account rather than an investment account, offering a fixed interest rate for a specified term.

A stop-loss order is designed to automatically sell a security when it reaches a predetermined price, limiting potential losses.

PE ratio is a fundamental indicator, not a technical one, used to assess a stock's valuation.

NPV measures the difference between the present value of cash inflows and outflows over a period of time.

Alpha measures an investment's performance relative to a benchmark index, representing the excess return earned.

A stock buyback program aims to decrease the number of shares outstanding, potentially increasing the value per share and signaling confidence in the company's prospects.

Fundamental analysis focuses on quantitative and qualitative factors such as financial statements, management quality, and industry conditions, but excludes market sentiment.