#1
Which of the following is a tax-advantaged retirement account in the United States?
401(k)
ExplanationProvides tax advantages for retirement savings.
#2
What is a capital gain?
The profit from selling an investment
ExplanationThe profit realized from selling an investment.
#3
Which of the following is a tax-advantaged education savings account in the United States?
529 plan
ExplanationDesigned for saving for educational expenses with tax advantages.
#4
Which of the following is a tax-advantaged investment account specifically for medical expenses?
Health Savings Account (HSA)
ExplanationAccount designed for saving for medical expenses with tax advantages.
#5
What is the term for the process of spreading investments across different assets to reduce risk?
Diversification
ExplanationSpreading investments to lower overall risk.
#6
Which of the following is a tax-advantaged investment account in the United States specifically for higher education expenses?
529 plan
ExplanationDesigned for saving for higher education expenses with tax benefits.
#7
What is the main purpose of tax-loss harvesting?
Reducing taxes on capital gains
ExplanationOffsetting gains with losses to reduce tax liability.
#8
Which investment strategy aims to maximize returns by buying and holding a diversified portfolio over the long term?
Buy and hold
ExplanationMaximizing returns through long-term diversified holdings.
#9
What is a potential advantage of investing in dividend-paying stocks?
Regular income
ExplanationProvides regular income through dividends.
#10
Which of the following investment types typically has the lowest tax implications?
Bonds
ExplanationUsually has lower tax implications compared to other investments.
#11
What is the primary benefit of tax deferral?
Delaying taxes to a future date
ExplanationPostponing tax payments until a later time.
#12
Which of the following is a tax-advantaged investment account in the United States that is not tied to retirement?
529 plan
ExplanationTax-advantaged account for non-retirement expenses, such as education.
#13
In which situation might a tax-deferred investment account be beneficial?
When you want to defer taxes on investment gains
ExplanationDeferring taxes on investment gains until later.