#1
Which of the following is a characteristic of stocks?
High liquidity
Fixed interest payments
Maturity date
Low volatility
#2
What does the term 'diversification' mean in investment?
Investing in a single asset class
Reducing risk by investing in various assets
Investing only in high-risk assets
Investing in assets with high correlation
#3
What is the primary purpose of a mutual fund?
To provide guaranteed returns
To pool money from investors and invest in securities
To offer high-risk investments
To invest solely in real estate
#4
What does the term 'asset allocation' refer to in investment?
The process of converting assets into cash
The distribution of investments among different asset classes
The process of investing in a single asset class
The purchase of low-risk assets only
#5
What does the term 'compounding' refer to in investing?
Investing in multiple companies
Earning interest on both the initial principal and the accumulated interest
Investing in high-risk assets
Diversifying investments across different asset classes
#6
Which of the following is an example of a fixed-income security?
Stock
Option
Bond
Mutual fund
#7
What does the term 'ROE' stand for in finance?
Return on Equity
Rate of Exchange
Revenue on Expenses
Risk of Earnings
#8
What is the main characteristic of a bond?
Ownership stake in a company
Potential for high returns
Fixed income stream
Unlimited profit potential
#9
Which investment strategy aims to buy and hold a diversified portfolio for the long term?
Day trading
Swing trading
Value investing
Market timing
#10
What is a 'hedge fund'?
A mutual fund managed by multiple investors
A type of investment fund that aims to reduce risk
An investment vehicle regulated by the government
A fund that invests solely in bonds
#11
What is the primary goal of a 401(k) retirement account?
To provide short-term gains
To allow unlimited withdrawals at any time
To enable tax-deferred growth of retirement savings
To invest only in high-risk assets
#12
What is the primary objective of an ETF (Exchange-Traded Fund)?
To invest only in commodities
To provide guaranteed returns
To track the performance of a specific index or asset class
To invest solely in real estate
#13
What is the concept of 'risk tolerance' in investing?
The willingness to take on more risk for higher returns
The aversion to taking any risks
The ability to invest in any asset class
The preference for short-term investments
#14
What does the term 'asset under management (AUM)' refer to?
The total value of a company's assets
The amount of money a portfolio manager oversees
The profit generated from selling assets
The total amount invested in a single asset
#15
What is a 'call option' in the context of options trading?
Right to sell an asset at a specified price
Right to buy an asset at a specified price
Obligation to sell an asset at a specified price
Obligation to buy an asset at a specified price
#16
What is the key feature of a Real Estate Investment Trust (REIT)?
Highly liquid investment
Invests solely in stocks
Provides fixed income stream
Invests in real estate and distributes income to shareholders
#17
What is a 'stock split'?
A dividend payment made in the form of additional shares
The process of dividing a company's shares into smaller units
The purchase of a company's shares by another company
The merging of two companies' stocks
#18
What is a 'callable bond'?
A bond that cannot be redeemed before maturity
A bond issued by a corporation
A bond that can be redeemed by the issuer before maturity
A bond that pays variable interest rates
#19
What does the term 'short selling' mean?
Selling an asset with the intention of buying it back later at a lower price
Selling an asset with the intention of buying it back later at a higher price
Selling an asset with the intention of holding it indefinitely
Selling an asset with the intention of receiving dividends