How Well Do You Know About Investment Strategies?

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| By Tanya Mishra

Tanya Mishra

Community Contributor

Quizzes Created: 606 | Total Attempts: 1,442,354

Questions: 10 | Attempts: 48 | Updated: Nov 16, 2023

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How Well Do You Know About Investment Strategies? - Quiz

With the advancement of society and the internet, the investment world has changed dramatically. How well do you know about various investment strategies? If you know enough, then feel free to give this fun and informative quiz a try! Just answer a few questions to enter the world of stocks, online trading, bond, etc. Are you ready? There's no time bar, so feel free to take this quiz as often as possible! We hope you learn some new things with the quiz! Good Luck!

Questions and Answers

1.

Which of the following type of investment allows an individual to purchase into an entire industry, commodity group, or stock market?
- A.
  
  RRSP
- B.
  
  ETF
- C.
  
  Online trading
- D.
  
  Mutual Fund
Correct Answer
D. Mutual Fund

Explanation
A mutual fund allows an individual to purchase into an entire industry, commodity group, or stock market. This is because a mutual fund pools money from multiple investors and invests it in a diversified portfolio of stocks, bonds, or other securities. By investing in a mutual fund, an individual can gain exposure to a wide range of assets within a specific industry, commodity group, or stock market, without having to buy individual stocks or securities. This provides investors with the opportunity to diversify their investments and potentially reduce risk.

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2.

Which of the following is NOT a benefit of online trading?
- A.
  
  Online accessibility
- B.
  
  One can monitor investments in real time
- C.
  
  It's easier to invest too much too fast
- D.
  
  More control of the investments
Correct Answer
C. It's easier to invest too much too fast

Explanation
Online trading offers several benefits such as online accessibility, real-time monitoring of investments, and more control over investments. However, one of the drawbacks of online trading is that it can be easier to invest too much too fast. This means that individuals may be tempted to invest large amounts of money quickly without properly considering the risks and potential losses. This can lead to financial instability and loss of investments.

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3.

Which of the following is a good investment option for the future?
- A.
  
  Mutual funds
- B.
  
  Gold
- C.
  
  Property
- D.
  
  Viaticals
Correct Answer
A. Mutual funds

Explanation
Mutual funds are considered a good investment option for the future because they offer diversification, professional management, and liquidity. By pooling money from multiple investors, mutual funds can invest in a wide range of securities, reducing the risk of investing in a single asset. Additionally, mutual funds are managed by experienced professionals who actively monitor and adjust the fund's holdings to maximize returns. Lastly, mutual funds offer liquidity, allowing investors to buy or sell their shares at any time. Overall, these factors make mutual funds a suitable investment choice for long-term growth and financial stability.

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4.

Increasing the percentage of which type of investment in your portfolio will lower your overall investment risk.
- A.
  
  Equity
- B.
  
  Bond
- C.
  
  REIT
- D.
  
  RRSP
Correct Answer
B. Bond

Explanation
Investing in bonds can lower overall investment risk because bonds are considered less risky than equities. Bonds are debt instruments issued by governments or corporations, and they pay a fixed interest rate over a specific period of time. They are generally considered safer investments compared to equities, which are subject to market volatility and fluctuations. By increasing the percentage of bonds in your portfolio, you are diversifying your investments and reducing the potential impact of market fluctuations on your overall investment risk.

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5.

Which of the following is amongst the benefit of diversification in one's investments?
- A.
  
  Reduced risk
- B.
  
  Increased risk
- C.
  
  Reduced tax liability
- D.
  
  None of the above
Correct Answer
A. Reduced risk

Explanation
Diversification is a risk management strategy that involves spreading investments across different assets or asset classes. By diversifying, an investor can reduce the risk of losing all their investments in case one investment performs poorly. This is because different investments tend to have different levels of risk and may perform differently under various market conditions. Therefore, by diversifying, an investor can reduce the overall risk of their portfolio and potentially achieve more stable returns over time.

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6.

The quality of an asset that permits it to be converted into cash without loss of value is called what?
- A.
  
  Equity
- B.
  
  Risk
- C.
  
  Interest Rate
- D.
  
  Liquidity
Correct Answer
D. Liquidity

Explanation
Liquidity refers to the quality of an asset that allows it to be easily converted into cash without incurring a loss in value. Assets that are highly liquid can be quickly sold or traded in the market, providing the owner with immediate access to cash. This is an important characteristic for investors and businesses as it ensures their ability to meet financial obligations and take advantage of investment opportunities.

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7.

Who discovered the Rule of 72?
- A.
  
  Peter Lynch
- B.
  
  Albert Einstein
- C.
  
  Warren Buffett
- D.
  
  Timothy Sykes
Correct Answer
B. Albert Einstein

Explanation
Albert Einstein discovered the Rule of 72. The Rule of 72 is a mathematical formula used to estimate the time it takes for an investment to double in value. It states that by dividing 72 by the annual rate of return, one can approximate the number of years it will take for the investment to double. Although Albert Einstein is primarily known for his contributions to physics, he made significant contributions to mathematics as well, including the development of the Rule of 72.

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8.

Which of the following is the cheapest type of brokerage account?
- A.
  
  Discount broker with assistance
- B.
  
  Full service broker
- C.
  
  Discount/online broker
- D.
  
  Money manager
Correct Answer
C. Discount/online broker

Explanation
A discount/online broker is the cheapest type of brokerage account because they typically charge lower fees and commissions compared to full-service brokers. Discount/online brokers offer basic trading services without providing personalized investment advice or assistance. This cost-saving approach allows them to offer lower fees, making them a more affordable option for investors who prefer to manage their own investments. Money managers, on the other hand, are typically more expensive as they provide personalized investment advice and actively manage the portfolio on behalf of the investor.

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9.

A comprehensive list of an individual's investments is called a what?
- A.
  
  Investment History
- B.
  
  Investment Statement
- C.
  
  Bank Statement
- D.
  
  Portfolio
Correct Answer
D. Portfolio

Explanation
A comprehensive list of an individual's investments is called a portfolio. This term refers to a collection of investments, such as stocks, bonds, mutual funds, and other assets, owned by an individual or an organization. It provides a snapshot of the individual's investment holdings, including the types of investments, their quantities, and their current values. A portfolio helps investors track and manage their investments, assess their performance, and make informed decisions about their financial goals and strategies.

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10.

An individual's piece of ownership in a company or mutual fund is called what?
- A.
  
  Share
- B.
  
  401K
- C.
  
  Bond
- D.
  
  Equity
Correct Answer
A. Share

Explanation
An individual's piece of ownership in a company or mutual fund is called a share. This represents their proportional ownership in the assets and earnings of the company or fund. Shares can be bought and sold in the stock market, allowing investors to participate in the company's growth and profitability.

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Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

Current Version
Nov 16, 2023

Quiz Edited by
ProProfs Editorial Team
Nov 13, 2022

Quiz Created by
Tanya Mishra

How Well Do You Know About Investment Strategies?

Which of the following type of investment allows an individual to purchase into an entire industry, commodity group, or stock market?

Which of the following is NOT a benefit of online trading?

Which of the following is a good investment option for the future?

Increasing the percentage of which type of investment in your portfolio will lower your overall investment risk.

Which of the following is amongst the benefit of diversification in one's investments?

The quality of an asset that permits it to be converted into cash without loss of value is called what?

Who discovered the Rule of 72?

Which of the following is the cheapest type of brokerage account?

A comprehensive list of an individual's investments is called a what?

An individual's piece of ownership in a company or mutual fund is called what?