#1
What is the primary purpose of diversification in investment?
To increase risk
To concentrate all investments in one asset
To reduce risk by spreading investments across different assets
To maximize returns
#2
What is the main purpose of a 529 plan in financial planning?
Emergency fund
Healthcare savings
Education savings
Retirement income
#3
What is the purpose of the Sharpe ratio in investment analysis?
Measuring market volatility
Assessing risk-adjusted returns
Calculating interest rates
Predicting stock prices
#4
What is the key benefit of holding a diversified portfolio?
Higher potential returns
Lower risk through asset variety
Tax advantages
Guaranteed income
#5
What is the role of compounding in investment growth?
Reducing investment risk
Accelerating the growth of investment returns over time
Increasing taxation on gains
Ensuring a fixed rate of return
#6
What does the term 'ROI' stand for in finance?
Return on Investment
Rate of Inflation
Risk of Investment
Revenue from Operations
#7
Which of the following is a type of retirement account that offers tax advantages?
Savings account
401(k)
Certificate of Deposit (CD)
Regular brokerage account
#8
Which of the following is an example of a liquid asset?
Real estate
Stocks
Collectibles
Long-term bonds
#9
What does the term '401(k)' represent in the context of retirement savings?
Social Security benefits
Employer-sponsored retirement plan
Individual Retirement Account (IRA)
Pension plan
#10
Which investment strategy involves buying and holding a diversified portfolio for the long term?
Day trading
Swing trading
Value investing
Passive investing
#11
What is the concept of 'dollar-cost averaging' in investment?
Investing a fixed amount at regular intervals
Buying and selling options
Speculating on currency markets
Short-selling stocks
#12
What is the key characteristic of a fixed-income investment?
High potential returns
Variable interest rates
Guaranteed regular income payments
No risk of loss
#13
What does the term 'alpha' refer to in the context of investment performance?
Risk-free rate of return
Market return
Excess return compared to a benchmark
Beta coefficient
#14
In investment, what does the term 'liquidity' refer to?
Ease of converting an asset into cash
High-risk investment
Long-term growth potential
Tax implications
#15
What is the primary objective of a hedge fund?
Guaranteed returns
Capital preservation
Risk reduction
Maximizing shareholder value
#16
Which economic indicator is often considered a leading indicator for the overall health of the economy?
Consumer Price Index (CPI)
Gross Domestic Product (GDP)
Unemployment rate
Stock market performance
#17
What is the primary function of a financial advisor in the context of investment planning?
Guaranteeing investment returns
Minimizing taxes
Providing legal advice
Helping clients achieve financial goals