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Investment Knowledge Quiz: Test Your Expertise

Wooden economy and currency units on craft background

  • Question of

    What does it mean to be diversified?

    • A Having as much money in bonds as you do in stocks
    • Owning investments that react differently to market or economic events
    • Owning at least 20 stocks in whatever industry you think will perform best
  • Question of

    What is false diversification?

    • When all your investments move to different rhythms
    • When some of your investments are up while others are down
    • Owning a lot of investments that all move up and down together
  • Question of

    What do you get when you buy a share of a mutual fund?

    • A share of all the investments the funds owns
    • A ownership stake in the mutual funds company
    • The right to vote at shareholders meeting for the companies the mutual funds owns
  • Question of

    Which of the following is a key difference between ETFs and mutual funds?

    • ETFs trade throughout the trading day while mutual funds trade once per day
    • ETFs are passively managed while mutual funds are actively managed
    • Mutual funds have managers while ETFs are unmanaged
  • Question of

    What is a sales load on a mutual fund?

    • Another name for an expense ratio
    • How many shares of the mutual fund are sold on any given day
    • A commission paid by the investor when buying or selling the fund
  • Question of

    What is a basis point?

    • A measure used to express differences in interest rates, equal to 0.01%
    • A measure used to express differences in interest rates, equal 0.1%
    • A term the financial industry invented to further confuse investors about how their investments are performing
  • Question of

    What does it mean to short a stock?

    • To only pay for part of your stock purchase
    • To sell stock you don’t own
    • To sell part of your losing position in a stock

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Written by motiva8

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