PFS Investment Planning

Question 1

Which investment type typically offers the highest potential return over the long term?

Accepted Answer

Stocks

Answer

Bonds

Answer

Certificates of Deposit

Answer

Money Market Accounts

Question 2

What does diversification in a portfolio aim to reduce?

Accepted Answer

Unsystematic risk

Answer

Return

Answer

Liquidity

Answer

Systematic risk

Question 3

What is the primary objective of asset allocation in investment planning?

Accepted Answer

Balance risk and return

Answer

Maximize taxes

Answer

Minimize expenses

Answer

Avoid inflation

Question 4

Which of the following is considered a fixed-income investment?

Accepted Answer

Bonds

Answer

Real estate

Answer

Stocks

Answer

Commodities

Question 5

Which term best describes the risk of losing purchasing power due to rising prices?

Accepted Answer

Inflation risk

Answer

Credit risk

Answer

Liquidity risk

Answer

Market risk

Question 6

What is the main benefit of investing in index funds?

Accepted Answer

Broad market exposure at low cost

Answer

High management fees

Answer

Guaranteed returns

Answer

Active trading advantages