Test Flashcards
7 cards from real Investment practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Test flashcards as text
What is the primary risk of investing in a single company's stock?
Answer: Concentration risk
Holding one stock exposes the investor to concentration risk tied to that company.
What is an index fund designed to do?
Answer: Match a market index's performance
An index fund aims to replicate the performance of a market index.
What is a 401(k)?
Answer: An employer-sponsored retirement plan
A 401(k) is an employer-sponsored, tax-advantaged retirement savings plan.
What does 'buy low, sell high' describe?
Answer: A basic profit principle
Buying at a low price and selling at a higher price generates profit.
What is inflation's effect on purchasing power over time?
Answer: Decreases it
Inflation erodes purchasing power, reducing what money can buy over time.
What is a stop-loss order?
Answer: An order to sell once a price falls to a set level
A stop-loss order sells a security when it reaches a specified lower price to limit losses.
Which factor most increases the long-term growth of investments?
Answer: Time in the market and compounding
Staying invested over time allows compounding to drive long-term growth.