Investing Terms Quiz

Essential Investing Terms Quiz

Test your knowledge of 30 essential investing terms every beginner should know.

1. What is an Asset?
Correct!
Incorrect. The right answer is: Anything you own that has value and can potentially generate income.
2. What does owning a Stock represent?
Correct!
Incorrect. The right answer is: A share of ownership in a company.
3. What is a Bond?
Correct!
Incorrect. The right answer is: A loan you give to a government or corporation with regular interest payments.
4. What is a Mutual Fund?
Correct!
Incorrect. The right answer is: A collection of money from many investors used to buy a diversified portfolio.
5. What is an ETF (Exchange-Traded Fund)?
Correct!
Incorrect. The right answer is: A fund similar to a mutual fund but traded on exchanges like stocks.
6. What is an Index Fund?
Correct!
Incorrect. The right answer is: A fund that tracks a specific market index like the S&P 500.
7. What is a Dividend?
Correct!
Incorrect. The right answer is: A portion of a company’s profits paid out to shareholders.
8. What is a Capital Gain?
Correct!
Incorrect. The right answer is: The profit made when selling an investment for more than you paid for it.
9. What is a Capital Loss?
Correct!
Incorrect. The right answer is: The loss incurred when selling an investment for less than you paid for it.
10. What is a Portfolio?
Correct!
Incorrect. The right answer is: A collection of all your investments.
11. What is Diversification?
Correct!
Incorrect. The right answer is: Spreading investments across different assets to reduce risk.
12. What is Risk Tolerance?
Correct!
Incorrect. The right answer is: How much risk you’re comfortable taking with your investments.
13. What is Asset Allocation?
Correct!
Incorrect. The right answer is: How you divide your money among different asset classes like stocks, bonds, and cash.
14. What is Liquidity?
Correct!
Incorrect. The right answer is: How quickly and easily an asset can be converted to cash.
15. What is Market Capitalization?
Correct!
Incorrect. The right answer is: The total value of a company’s outstanding shares of stock.
16. What is a Bull Market?
Correct!
Incorrect. The right answer is: A period of rising prices and optimism in the market.
17. What is a Bear Market?
Correct!
Incorrect. The right answer is: A period of falling prices and investor pessimism.
18. What is Volatility?
Correct!
Incorrect. The right answer is: How much and how quickly an investment’s price fluctuates.
19. What is Return on Investment (ROI)?
Correct!
Incorrect. The right answer is: A measure of how much you earn or lose on an investment relative to its cost.
20. What is an Expense Ratio?
Correct!
Incorrect. The right answer is: The annual fee charged by a fund expressed as a percentage.
21. What is the Price-to-Earnings (P/E) Ratio?
Correct!
Incorrect. The right answer is: A ratio that compares a company’s stock price to its earnings per share.
22. What is Dollar-Cost Averaging?
Correct!
Incorrect. The right answer is: A strategy of investing a fixed amount regularly regardless of market conditions.
23. What is Rebalancing?
Correct!
Incorrect. The right answer is: Adjusting your portfolio to maintain your desired asset allocation.
24. What is a Roth IRA?
Correct!
Incorrect. The right answer is: A retirement account where contributions are made with after-tax dollars and qualified withdrawals are tax-free.
25. What is a Traditional IRA?
Correct!
Incorrect. The right answer is: A retirement account where contributions may be tax-deductible, but withdrawals in retirement are taxed as income.
26. What is a 401(k)?
Correct!
Incorrect. The right answer is: An employer-sponsored retirement plan that lets you save with pre-tax dollars.
27. What is Compound Interest?
Correct!
Incorrect. The right answer is: Interest calculated on the initial principal and also on the accumulated interest.
28. What are Blue-Chip Stocks?
Correct!
Incorrect. The right answer is: Stocks of large, well-established companies with strong reputations.
29. What are Growth Stocks?
Correct!
Incorrect. The right answer is: Stocks of companies that are expected to grow earnings at an above-average rate.
30. What are Value Stocks?
Correct!
Incorrect. The right answer is: Stocks that appear to be undervalued based on their fundamentals.

Quiz Results

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