Test Your Money Smarts

Think you have a good handle on the basics of investing? Take this 10-question quiz to see how you rate on basic investment skills.

  1. If you buy a share of company stock,
    1. You own a part of the company.
    2. You have loaned your money to the company.
    3. You become responsible for the company’s debts.
    4. The company will return 100% of your investment to you, with a fixed rate of interest.
  2. If you buy a company’s bond,
    1. You own a part of the company.
    2. You have loaned your money to the company.
    3. You become responsible for the company’s debts.
    4. You have a say in how the company is managed.
  3. Since 1929, the type of investment that has earned the most money for investors has been:
    1. Stocks.
    2. Bonds.
    3. Savings accounts.
    4. Certificates of Deposit (CDs).
  4. If you buy the stock of a new company,
    1. You cannot lose money.
    2. You can lose all the money you used to buy the stock.
    3. You can lose only a portion of the money you used to buy the stock.
    4. The FDIC will insure the investment you made in the stock.
  5. Kendrick owns a wide variety of stocks, bonds and mutual funds to lessen his risk of losing money. This is called:
    1. Saving.
    2. Compounding.
    3. Diversifying.
    4. Shorting.
  6. What asset class has, on the whole, produced the best performance results since 1929?
    1. Bonds
    2. Stocks
    3. Gold
    4. Bitcoin
  7. Tom wants to have $100,000 in savings in 20 years. The sooner he starts to save, the less he’ll have to save because:
    1. The stock market will be higher in 20 years.
    2. Interest rates will be higher in 20 years.
    3. Interest on his savings will start compounding.
    4. Inflation will reduce the purchasing power of his $100,000 goal.
  8. Mutual funds have a number of attractive characteristics for retirement plan investors, EXCEPT (pick one):
    1. They are guaranteed to earn more than bank savings accounts.
    2. They are managed by experts at picking investments.
    3. They offer risk-return potential that reflects the many types of securities they invest in.
    4. They pool money from many different investors.
  9. Which all-in-one investment is designed to get more conservative as you approach retirement?
    1. Roth IRA
    2. Fixed annuity
    3. Target-date fund
    4. Money market fund
  10. All the following statements are true about International Investing EXCEPT (pick one):
    1. There are more companies outside the U.S. than inside the U.S.
    2. International investments are often used to broaden diversification and spread investment risk.
    3. There are particular risks involved with investing internationally, including political risk and currency and liquidity risks.
    4. International stocks always offer more return than U.S. stocks.