Take this short quiz to test your investing know-how. Select the best choice for each question. Good luck!

1. An investing technique intended to minimize risk by investing in a number of different funds is called:

a) Vesting

b) Rates of return

c) Diversification

2. A well-diversified portfolio:

a) Eliminates market risk but not inflation risk

b) Tends to reduce all types of risk

c) Eliminates market and political risk

3. A group of similar investments is called:

a) An asset class

b) A market grouping

c) A family of funds

4. The cost, or value, of one unit of an investment fund is referred to as:

a) Dollar value

b) Unit value

c) Market value

5. The measurement of an investment’s performance over a specified period of time is called:

a) Capital risk

b) Interest

c) Rate of return

6. Dollar-cost averaging:

a) Determines fees

b) Smoothes out the effects of market fluctuations

c) Is part of an incentive plan

7. A fee paid to the investment manager for professional services, including the daily management of each fund, is called:

a) Investment management fee

b) Operating expenses

c) Book value

8. To maintain your current lifestyle in retirement, what suggested percentage of your annual employment income will you need?

a) 100%

b) 40%

c) 70%

9. Risk tolerance is your ability to:

a) Understand risks

b) Withstand market volatility

c) Measure inflation 

ANSWERS: 1)c  2)b  3)a  4)b  5)c  6)b  7)a  8)c  9)b

*8 (70% is commonly referred to as an ideal amount, but everyone is different, while (c) is indicated as the correct answer if you answered (a) or (b) you may be correct.

Resources: https://www.getsmarteraboutmoney.ca/invest/investing-basics/