Return to course: Introduction to Financial Literacy
Quiz: Investing Basics
What does owning a stock represent?
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A loan to a company
A debt instrument
A share in the company's ownership
A mutual fund investment
Which type of investment is generally considered the highest risk?
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Stocks
Bonds
Mutual funds
Government bonds
What is a common way investors earn a return on stocks, besides selling the stock for a profit?
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Interest payments
Dividends
Principal repayments
Expense ratios
Bonds are best suited for which type of investor?
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Investors seeking high returns with high risk
Investors nearing retirement who want steady income
Investors who want professional management
Investors looking for capital appreciation
Which of the following is NOT a type of bond?
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Government bonds
Corporate bonds
Equity bonds
Municipal bonds
What is the primary benefit of investing in mutual funds?
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Higher risk and higher returns
Professional management and diversification
Direct ownership in a company
Guaranteed returns on investment
How do mutual funds provide diversification?
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By pooling money from multiple investors to invest in a portfolio of different securities
By focusing solely on stocks from a single sector
By lending money to a company for interest payments
By issuing shares directly to individual investors
Which investment type typically has lower risk but offers steady income through interest payments?
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Stocks
Bonds
Mutual funds
Real estate
What kind of mutual fund primarily invests in stocks?
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Bond mutual funds
Equity mutual funds
Municipal bond funds
Balanced mutual funds
What is the main risk associated with stocks?
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Credit risk
Inflation risk
Market volatility
Liquidity risk
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