Stock Market

Test Your Investing IQ

 
Test Your Investing IQ

How much do you know about market basics? Put your investing IQ to the test with this quiz on stocks, bonds, and mutual funds.

 

Questions

 

1. What does it mean to buy stock in a company?

   a. The investor loans money to the company

   b. The investor becomes a part owner of the company

   c. The investor is liable for the company’s debts

 

2. Which of the following statements about stock indexes is correct?

   a. A stock index is an indicator of stock price movements

   b. There are many different types of stock indexes

   c. They can be used as benchmarks to compare the performance of an individual investment to a group of its peers

   d. All of the above

 

3. What is a bond?

   a. An equity security

   b. A nonnegotiable note

   c. A debt investment in which an investor loans money to an entity

 

4. What kind of bond pays no periodic interest?

   a. Zero-coupon

   b. Floating-rate

   c. Tax-exempt

 

5. What is a mutual fund?

   a. A portfolio of securities assembled by an investment company

   b. An investment technique of buying a fixed dollar amount of a particular investment regularly

   c. A legal document that provides details about an investment

 

6. What is the difference between mutual fund share classes?

   a. The investment advisers responsible for managing each class

   b. The investments each class makes

   c. The fees and expenses charged by each fund class

 

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Eleven Ways to Help Yourself Stay Sane in a Crazy Market

 
Eleven Ways to Help Yourself Stay Sane in a Crazy MarketKeeping your cool can be hard to do when the market goes on one of its periodic roller-coaster rides. It’s useful to have strategies in place that prepare you both financially and psychologically to handle market volatility. Here are 11 ways to help keep yourself from making hasty decisions that could have a long-term impact on your ability to achieve your financial goals.
 

1. Have a game plan

 
Having predetermined guidelines that recognize the potential for turbulent times can help prevent emotion from dictating your decisions. For example, you might take a core-and-satellite approach, combining the use of buy-and-hold principles for the bulk of your portfolio with tactical investing based on a shorter-term market outlook. You also can use diversification to try to offset the risks of certain holdings with those of others. Diversification may not ensure a profit or guarantee against a loss, but it can help you understand and balance your risk in advance. And if you’re an active investor, a trading discipline can help you stick to a long-term strategy. For example, you might determine in advance that you will take profits when a security or index rises by a certain percentage, and buy when it has fallen by a set percentage.
 
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