AAII

1. Why is the percentage of your portfolio you invest in the broad categories of stocks, bonds, and cash important?

It can eliminate many of the risks unique to individual investments

It makes calculating your return easier

It simplifies other investment decisions

2. What’s the key to looking at past performance figures?

Using a time period that encompasses several economic cycles

Keeping in mind that the future may deviate from the past

Understanding what investment segment the data covers

All of the above

3. Market risk for a bond is called:

Interest rate risk

Income risk

Principal risk

4. Which faces the least inflation risk?

Government bonds

Stocks

Money market funds

5. The inability to sell a stock at a reasonable price because of a lack of buyers' interest is called:

Industry risk

Liquidity risk

Business risk

6. Looking at long-term average annual returns can give you a good idea of an investment’s year to year fluctuations.

True

False

7. Stocks are always a poor source of income.

True

False

8. There may be several combinations of stock, bonds and cash that fit your investing profile.

True

False

QUIZ: First Steps to Successful Investing