Investment and Financial Literacy Quiz Explore essential concepts like ROI, diversification, 401(k), and more. Assess your financial knowledge with 15 questions on investment and financial literacy.
#1
What does ROI stand for in investment?Return on Investment
Rate of Interest
Risk of Investment
Revenue on Investment
#2
Which of the following is a type of investment?Saving account
Checking account
Certificate of deposit (CD)
Credit card
#3
What is a bear market?A market with declining stock prices
A market with increasing stock prices
A market with stable stock prices
A market with high volatility
#4
What is the purpose of a stop-loss order in investing?To buy more stocks
To sell a stock when it reaches a certain price to limit losses
To hold onto a stock indefinitely
To sell all stocks
#5
What is the purpose of an emergency fund?To invest in high-risk assets
To save for retirement
To cover unexpected expenses
To pay off debt
#6
What is diversification in investment?Investing in a single asset class
Investing in multiple asset classes
Investing only in stocks
Investing in high-risk assets
#7
What is the concept of 'buying on margin' in investing?Buying stocks with borrowed money
Buying stocks at a discount
Buying stocks at a premium
Buying stocks at market price
#8
What is the purpose of a 401(k) retirement plan?To provide health insurance
To save for retirement
To invest in stocks
To pay off debt
#9
What is the difference between a stock and a bond?Stocks represent ownership, while bonds represent debt
Stocks pay interest, while bonds pay dividends
Stocks have fixed returns, while bonds have variable returns
Stocks are low risk, while bonds are high risk
#10
What is the purpose of asset allocation in investment?To invest only in high-risk assets
To minimize investment risk by spreading investments across different asset classes
To maximize investment returns by focusing on a single asset class
To invest in assets with guaranteed returns
#11
What is the 'time value of money'?Money earned over time
Money's potential to grow in value over time
Money's value decreases over time
Money's value increases with time
#12
What is the rule of 72 in finance?It calculates the amount of money you need to retire
It calculates how long it takes for an investment to double at a given interest rate
It calculates the maximum percentage of income you should spend on housing
It calculates the minimum amount of money you need to start investing
#13
What is the difference between a mutual fund and an ETF?Mutual funds are actively managed, while ETFs are passively managed
Mutual funds are traded on stock exchanges, while ETFs are not
Mutual funds have lower fees than ETFs
Mutual funds have higher liquidity than ETFs
#14
What is the concept of 'compounding' in finance?Earning interest on interest
Earning a fixed return on an investment
Investing in high-risk assets
Investing in low-risk assets
#15
What is the 'efficient market hypothesis'?The theory that markets are always perfectly efficient and reflect all available information
The theory that markets are inefficient and it is possible to consistently beat the market
The theory that markets are efficient only during certain times
The theory that markets are inefficient due to government intervention
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