Investing Questions and Answers Latest
Version (2024/2025) Already Passed
What is the main purpose of investing?
✔✔The main purpose of investing is to grow wealth over time by purchasing assets that will
increase in value or generate income.
What is a stock?
✔✔A stock represents a share in the ownership of a company and constitutes a claim on part of
the company’s assets and earnings.
What is a bond?
✔✔A bond is a debt security, similar to an IOU, where the issuer owes the holder a debt and is
obligated to pay interest and/or repay the principal at a later date.
What is diversification in investing?
✔✔Diversification is the strategy of spreading investments across various assets or sectors to
reduce the risk of a loss.
1
, What is the difference between a traditional IRA and a Roth IRA?
✔✔The key difference is that contributions to a traditional IRA are made with pre-tax dollars,
while Roth IRA contributions are made with after-tax dollars, but Roth withdrawals are tax-free.
What is the definition of a mutual fund?
✔✔A mutual fund is a pool of funds collected from many investors for the purpose of investing
in securities such as stocks, bonds, money market instruments, and other assets.
What is an ETF (Exchange-Traded Fund)?
✔✔An ETF is a type of investment fund and exchange-traded product, meaning it is traded on
stock exchanges, much like stocks, and typically tracks an index, commodity, or a basket of
assets.
What is a dividend?
✔✔A dividend is a portion of a company’s earnings that is distributed to shareholders, typically
in the form of cash or additional shares.
What is the difference between growth stocks and value stocks?
2
Version (2024/2025) Already Passed
What is the main purpose of investing?
✔✔The main purpose of investing is to grow wealth over time by purchasing assets that will
increase in value or generate income.
What is a stock?
✔✔A stock represents a share in the ownership of a company and constitutes a claim on part of
the company’s assets and earnings.
What is a bond?
✔✔A bond is a debt security, similar to an IOU, where the issuer owes the holder a debt and is
obligated to pay interest and/or repay the principal at a later date.
What is diversification in investing?
✔✔Diversification is the strategy of spreading investments across various assets or sectors to
reduce the risk of a loss.
1
, What is the difference between a traditional IRA and a Roth IRA?
✔✔The key difference is that contributions to a traditional IRA are made with pre-tax dollars,
while Roth IRA contributions are made with after-tax dollars, but Roth withdrawals are tax-free.
What is the definition of a mutual fund?
✔✔A mutual fund is a pool of funds collected from many investors for the purpose of investing
in securities such as stocks, bonds, money market instruments, and other assets.
What is an ETF (Exchange-Traded Fund)?
✔✔An ETF is a type of investment fund and exchange-traded product, meaning it is traded on
stock exchanges, much like stocks, and typically tracks an index, commodity, or a basket of
assets.
What is a dividend?
✔✔A dividend is a portion of a company’s earnings that is distributed to shareholders, typically
in the form of cash or additional shares.
What is the difference between growth stocks and value stocks?
2
