Investment Quiz

1. From 1980 to 2016 gold has earned an average annual return of_____

  1. 14 percent
  2. 11 percent
  3. 8 percent
  4. 2 percent

Correct Answer: d) 2 percent

2. Contributions to a Roth IRA can always be withdrawn anytime, for any reason tax and penalty-free before age 59 1/2.

a) True
b) False

Correct Answer: a) True

3. A $100,000 portfolio that gains 20% and then loses 20% the following year would still be worth $100,000.

a) True
b) False

Correct Answer: b) False
A $100,000 portfolio that gains 20 percent ($20,000) in year one is worth $120,000.
A 20% loss on $120,000 (-$24,000) in year two, reduces the portfolios value to $96,000.

4. Index funds have outperformed _____of all actively managed U.S. stock mutual funds over the past 10 years.

a) 50%
b) 65%
c) 80%

Correct Answer: c) 80%

5. According to Morningstar; what is the best predictor of a mutual funds future performance?

  1. A funds past performance
  2. A funds expense ratio
  3. A funds star ratings

Correct Answer: b) a funds expense ratio

6. Duration is a measure of a bond fund’s sensitivity to ________.

a) Inflation
b) Interest-rate changes
c) Stock-market volatility
d) None of the above

Correct Answer b) Interest rate changes

7. A mutual fund’s expense ratio represents all of the costs associated with owning a mutual fund.

a) True
b) False

Correct Answer b) False

8. If interest rates declined, the price of a bond fund would generally_______

a) Increase in value
b) Decrease in value
c) Stay about the same

Correct Answer a) Increase in value