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Quiz by Melia tyson

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19 questions
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  • Q1
    What is a key difference between saving and investing?
    Saving earns compound interest while investing earns simple interest
    Saving guarantees you the money you put away while investing has no guarantees
    Saving earns a much higher rate of return than investing your money
    Saving is for long-term goals; investing is for short-term goals
    30s
  • Q2
    Select the best definition of compound interest.
    Compound interest is earning a fixed dollar amount on your bank account each month.
    Compound interest is earning interest on the original amount you deposited plus any interest earned.
    Compound interest is earning interest on the original amount you deposited.
    Compound interest is the amount of interest you are charged on your bank account each month.
    30s
  • Q3
    What is a stock?
    A stock is a type of investment that uses money from investors to purchase many different investment types.
    A stock is a lending investment to the government or a company.
    A stock is a share of ownership in a company.
    A stock is an insured bank account with high risk.
    30s
  • Q4
    What type of market is described by a receding economy and a decline in the stock market?
    Bear Market
    Bull Market
    Sheep Market
    Pig Market
    30s
  • Q5
    What is the current Trading Price? What was the price of this stock 5 years ago? Overall, is the market doing well today? (Make sure you are able to explain your answer for your test!!)
    Question Image
    232.90, 140.06, Yes
    233.08,140.06, Yes
    233.08, 122.06, Yes.
    232.90, 122.06, Yes
    30s
  • Q6
    Duncan plans to invest all of his money in individual stocks. Why is this likely a bad investment strategy?
    Purchasing individual stocks has a very low amount of risk and a low return.
    He will need a large amount of money to invest in individual stocks.
    He will need to open multiple brokerage accounts for each stock he purchases.
    Purchasing individual stocks has a high amount of risk and little diversification.
    30s
  • Q7
    Which statement best describes the risk level of bonds?
    Bonds have a moderate amount of risk, but are a riskier investment when compared to stocks.
    Bonds have no risk.
    Bonds have a low to moderate amount of risk and are less risky than stocks.
    Bonds are one of the riskiest investment types, but have the potential for a high return.
    30s
  • Q8
    What is one way you can earn money by investing in bonds?
    By selling your shares in the bond.
    Through dividends.
    Through interest collected on your original investment.
    By purchasing a diversified bond type.
    30s
  • Q9
    Lizzy is 24 years old. She makes $85,000 per year, has a fully funded Emergency Fund, and extra income each month. What should be her investor risk level?
    Average
    Moderate
    Aggressive
    Conservative
    30s
  • Q10
    Which of the following is a characteristic of an index fund?
    High fees
    Insured
    Diversified
    Professionally managed
    30s
  • Q11
    Your friend Jamal is 14 and wants to begin investing. He has taxable income from working at his uncle's sporting goods store. What type of account would you advise him to open?
    A custodial brokerage account
    A custodial Roth IRA
    A 401k
    A traditional savings account
    30s
  • Q12
    Mariam is young, willing to take a moderate amount of risk, but most importantly, wants an investment that is low-cost and diversified. Which is the best investment type for Mariam?
    A bond
    A savings account
    An index fund
    An individual stock
    30s
  • Q13
    Which statement best describes how diversification impacts risk when you are investing?
    Diversification means spreading your money across multiple investments, which increases risk.
    Diversification means putting all of your money into one investment, which decreases risk.
    Diversification means putting all of your money into one investment, which increases risk.
    Diversification means spreading your money across multiple investments, which decreases risk.
    30s
  • Q14
    What is one requirement to open a Custodial IRA account?
    You must have a valid driver's license
    You must have taxable income or wages.
    You must be 18 years old.
    You must also open a savings & checking account.
    30s
  • Q15
    Why is it important for you to understand YOUR risk tolerance before you start investing?
    it is recommended that people with a low risk tolerance shouldn't invest at all.
    You should create an investment portfolio that includes an amount of risk you are comfortable with.
    If you have a high risk tolerance, you will likely pay less in investment fees.
    You must be willing to take a high amount of risk to begin investing.
    30s

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