Investment Starting Investment 4

Question 1

What is a brokerage account used for?

Accepted Answer

Buying and selling securities like stocks and ETFs

Answer

A brokerage account is a platform to buy and sell investments such as stocks, bonds, and funds.

Question 2

What does 'expense ratio' measure for a fund?

Accepted Answer

The annual cost charged as a percentage of assets

Answer

The expense ratio is the yearly fee a fund charges, expressed as a percent of your investment.

Question 3

What is a dividend?

Accepted Answer

A share of profits paid to shareholders

Answer

A dividend is a portion of a company's earnings distributed to its shareholders.

Question 4

What does 'liquidity' mean in investing?

Accepted Answer

How quickly an asset can be converted to cash

Answer

Liquidity refers to how easily and quickly an asset can be sold for cash without losing value.

Question 5

Which is a sign of a scam investment for beginners?

Accepted Answer

Guaranteed high returns with no risk

Answer

Promises of guaranteed high returns with no risk are a classic red flag for fraud.

Investment Practice Test