Quiz – Test Your Knowledge

1. What does the acronym “ETF” stand for?

A. Electronically Traded Fund B. Exchange Traded Fund C. Equity Trading Form D. Estimated Transaction Fee

2. Which of these is a core principle of “Dollar-Cost Averaging” (DCA)?

A. Investing a fixed amount regularly, regardless of price B. Only buying stocks when they hit a 52-week low C. Doubling your investment after any market dip D. Selling all holdings when the market is down 10%

3. What is the primary purpose of diversification?

A. To guarantee higher returns B. To eliminate all investment risk C. To reduce risk by spreading investments across different assets D. To focus all capital on the single best-performing stock

4. A “Bear Market” is typically defined as:

A. A period of rising stock prices and investor optimism. B. A market decline of 20% or more from recent highs. C. A market focused on commodity stocks. D. A single day where the market drops significantly.

5. What does “P/E Ratio” measure?

A. The dividend payout of a company. B. A company’s share price relative to its earnings per share. C. The profit margin of a company. D. The total market value of a company.

6. Which investment is generally considered the highest risk?

A. A U.S. Government Treasury Bond B. A large-cap stock index fund (e.g., S&P 500) C. A savings account at an FDIC-insured bank D. Cryptocurrency like Bitcoin

7. “Compound Interest” is best described as:

A. Earning interest only on your original principal. B. A high-interest rate offered by banks. C. Earning interest on both your principal and accumulated interest. D. The interest charged on a margin loan.

8. What is the main difference between a “Trader” and an “Investor”?

A. There is no real difference. B. An investor holds assets for the long term, while a trader seeks short-term profits. C. A trader only deals in foreign currencies. D. An investor is always risk-averse.

9. What does “Asset Allocation” refer to?

A. Choosing which specific stocks to buy. B. The process of how an asset is bought and sold. C. The mix of different asset classes (stocks, bonds, cash) in a portfolio. D. The total value of all your investments.

10. A “Blue Chip” stock is typically characterized by:

A. Being a new, small company with high growth potential. B. Its association with the technology sector. C. A large, well-established, and financially sound company. D. Paying no dividends to its shareholders.

Test Your Investing IQ!