Investment Fundamentals and Financial Terminology Quiz

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

ETFs are investment funds traded on stock exchanges, offering diversified exposure to various assets.

Financial advisors offer guidance on investment strategies, retirement planning, and other financial matters tailored to individual needs.

Blue-chip stocks are shares of large, reputable companies with a history of stable earnings and dividends.

Bonds are debt securities issued by governments or corporations, offering fixed interest payments.

The Rule of 72 estimates the approximate time required for an investment to double at a given rate of return.

Mutual funds involve active management by fund managers aiming to outperform the market, while index funds aim to replicate the performance of a specific market index.

The P/E ratio indicates how much investors are willing to pay per dollar of earnings, providing insights into a stock's valuation.

Liquidity describes the ability to quickly convert an asset into cash without significantly impacting its price.

The SEC regulates securities markets, protects investors, and ensures fair and efficient capital markets.

Diversification involves allocating investments across different assets to mitigate the impact of any single asset's performance on the overall portfolio.