Investment Vehicles – Mastering the Art of Diversification Quiz

1 point(s)

Which of the following is a benefit of investing in individual stocks?

High potential returns

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Lower costs

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Limited liquidity

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Instant diversification

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1 point(s)

Dollar-cost averaging is a strategy commonly used in index investing.

True

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False

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1 point(s)

What is a disadvantage of investing in mutual funds compared to ETFs?

Higher fees

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Greater flexibility

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Lower risk

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More liquidity

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1 point(s)

ETFs can be traded throughout the trading day, offering flexibility.

True

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False

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3 point(s)

Definition

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Shares of ownership in a company that can be bought and sold on stock exchanges
A type of investment fund that holds a basket of assets, traded on stock exchanges
A pool of money from multiple investors used to buy a diversified portfolio of assets

Individual Stocks

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ETFs	Correct Incorrect Correct answer

Mutual Funds

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1 point(s)

Arrange these investment vehicles in ascending order of potential risk, starting with the lowest. (put the lowest at the top)

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1 point(s)

What is one concept you found most interesting in this chapter and how could you apply it in real-world investing?

This response will be awarded full points automatically, but it will be reviewed and possibly adjusted after submission.

3 point(s)

Definition

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The annual fee charged by the fund issuer as a percentage of your investment
The difference between the ETF's performance and that of its underlying index
The price per share of a mutual fund, calculated by dividing the total value of the fund's assets by the number of shares outstanding

Expense Ratio

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Tracking Error

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Net Asset Value

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1 point(s)

Sort the following investment strategies in ascending order of complexity, starting with the least complex. (put the least complex at the top)

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1 point(s)

Which investment vehicle provides the least liquidity?

ETFs

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Individual Stocks

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Mutual Funds

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Index Funds

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Investment Vehicles – Mastering the Art of Diversification Quiz