Investment Investment Vehicles and Instruments 1

Question 1

What is an Exchange-Traded Fund (ETF)?

Accepted Answer

A fund that tracks an index and trades on a stock exchange like a stock

Answer

A savings account with fixed interest

Answer

A government-issued bond

Answer

A certificate of deposit with variable rates

Question 2

Which type of bond is issued by the U.S. federal government and considered one of the safest investments?

Accepted Answer

Treasury bond

Answer

Municipal bond

Answer

Corporate bond

Answer

Junk bond

Question 3

What is a mutual fund?

Accepted Answer

A pooled investment vehicle managed by professionals that collects money from many investors

Answer

A loan product offered by banks

Answer

A type of insurance policy

Answer

A government savings program

Question 4

What does the term 'derivative' refer to in investing?

Accepted Answer

A financial contract whose value is derived from an underlying asset such as a stock or commodity

Answer

A stock that pays regular dividends

Answer

A type of savings bond

Answer

An interest rate set by the Federal Reserve

Question 5

What is a money market fund?

Accepted Answer

A low-risk mutual fund that invests in short-term, high-quality debt instruments

Answer

A fund that invests in volatile penny stocks

Answer

A fund exclusively for real estate investments

Answer

A hedge fund for high-net-worth individuals

Question 6

What is a REIT (Real Estate Investment Trust)?

Accepted Answer

A company that owns income-producing real estate and allows investors to buy shares

Answer

A government program for first-time home buyers

Answer

A type of mortgage insurance

Answer

A tax deduction for property owners