Financial Literacy and Investment Basics Quiz
Test your knowledge on investments with these essential questions covering ROI, diversification, asset allocation, and more!
#1
What is a common measure of a company's profitability?
Revenue
Assets
Net income
Liabilities
#2
What does ROI stand for in finance?
Return on Investment
Rate of Interest
Risk of Inflation
Revenue from Operations
#3
Which of the following is NOT a type of investment account?
IRA (Individual Retirement Account)
CD (Certificate of Deposit)
401(k) Account
HSA (Health Savings Account)
#4
What is the term for the process of spreading investments across various assets to reduce risk?
Concentration
Consolidation
Diversification
Specialization
#5
What is the purpose of a 'bull market'?
To signify a period of declining stock prices
To signify a period of rising stock prices
To signify a period of stable stock prices
To signify a period of economic recession
#6
What is the primary purpose of diversification in investment?
To maximize returns
To minimize risk
To increase volatility
To concentrate investments
#7
What is the term used for a financial instrument representing ownership in a company?
Bond
Stock
Mutual Fund
Derivative
#8
What does P/E ratio stand for in finance?
Price/Earnings ratio
Profit/Expense ratio
Percentage/Earnings ratio
Profit/Earnings ratio
#9
What is the primary goal of asset allocation in investment?
To minimize taxes
To maximize returns
To manage risk
To diversify income
#10
What does the term 'liquidity' refer to in finance?
A company's ability to generate profit
The ease of converting an asset into cash without affecting its price
The amount of debt a company holds
The amount of dividends paid to shareholders
#11
Which of the following investment options typically has the highest level of risk?
Government bonds
Savings accounts
Stocks
Certificates of deposit
#12
What is the purpose of a 'stop-loss order' in investment?
To limit potential losses by selling a security when it reaches a certain price
To lock in profits by selling a security when it reaches a certain price
To automatically reinvest dividends
To hedge against currency risk
#13
Which of the following investment vehicles typically offers the highest potential return?
Savings account
Government bonds
Stocks
Certificates of deposit (CDs)
#14
Which of the following investment options typically offers the highest potential return?
Treasury bills
Corporate bonds
Stocks
Savings accounts
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