Investment Investment MCQ 3

Question 1

A diversified portfolio is best described as one that:

Accepted Answer

Spreads investments across varied assets

Answer

Holds only one asset class

Answer

Concentrates in a single stock

Answer

Avoids stocks entirely

Question 2

Which account offers tax-free qualified withdrawals in retirement?

Accepted Answer

Roth IRA

Answer

Traditional IRA

Answer

Taxable brokerage

Answer

401(k) pre-tax

Question 3

Compound interest differs from simple interest because it:

Accepted Answer

Earns interest on interest

Answer

Ignores time

Answer

Is always lower

Answer

Applies only to bonds

Question 4

An index fund aims to:

Accepted Answer

Match a market index's performance

Answer

Beat the market actively

Answer

Invest only in bonds

Answer

Avoid all stocks

Question 5

What is liquidity in investing?

Accepted Answer

How easily an asset converts to cash

Answer

The amount of debt held

Answer

The dividend yield

Answer

The tax rate applied

Question 6

A blue-chip stock is typically:

Accepted Answer

A large, established, financially sound company

Answer

A small startup

Answer

A penny stock

Answer

A government bond

Question 7

Asset allocation primarily refers to:

Accepted Answer

Dividing investments among asset categories

Answer

Choosing a single stock

Answer

Timing daily trades

Answer

Avoiding taxes