Investment Quiz

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					                         Investment Quiz
                             [Answer Sheet]
1.   Index funds based on the S&P 500 outperform actively-managed funds
     over time because:
     A.     They have low management fees
     B.     Few fund managers can consistently beat the market averages
     C.     Their trading costs are minimal
     D.     They hold stocks longer, reducing taxes
     E.     All of the above

2.   Mutual funds are smart investing vehicles because:
     A.   You get guaranteed returns
     B.   They are more tax efficient
     C.   They make it easier to achieve a diversified portfolio

3.   If you’re looking for a place to invest money you’ll need in a year or two,
     stocks are the place to be because they’ll give you the best returns.
     A.       True
     B.      False

4.   Studies have shown that asset allocation is:
     A.     The single greatest determinant of investment performance
     B.     The least important factor affecting your investments’ performance
     C.     Not a factor in investment performance

5.   An effective investment portfolio is:
     A.    100 percent stocks
     B.    70 percent stocks
     C.    Varies with the individual

6.   Keeping too much money in money markets is not a good move
     A.    This is too risky
     B.    The returns are too low

7.   A person who has a high tolerance for market volatility is planning to
     retire in 25 years. A reasonable amount of their retirement funds to
     invest in the stock market is:
     A.     50 percent
     B.     30 percent
     C.     80 percent

8.   The following is a threat to investment success:
     A.    Fees charged by mutual fund companies
     B.    Churning—doing a lot of buying and selling quickly
     C.    Relying on one or two stocks
     D.    All of the above

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