Investment Jobs Fundamentals 5

Question 1

What is compound interest?

Accepted Answer

Interest earned on both principal and previously accumulated interest

Answer

Compound interest grows because it accrues on both the principal and the interest already earned.

Question 2

What does 'IPO' stand for?

Accepted Answer

Initial Public Offering

Answer

An IPO (Initial Public Offering) is when a private company first sells shares to the public.

Question 3

What is the difference between a stock and a bond?

Accepted Answer

A stock is ownership; a bond is a loan to the issuer

Answer

Stocks grant ownership equity, while bonds are debt that must be repaid with interest.

Question 4

What does 'volatility' measure in financial markets?

Accepted Answer

The degree of variation in an asset's price over time

Answer

Volatility quantifies how much an asset's price fluctuates, often used as a risk measure.

Question 5

What is a mutual fund?

Accepted Answer

A pooled investment vehicle managed professionally for many investors

Answer

A mutual fund pools money from many investors and is professionally managed across a diversified portfolio.

Investment Practice Test