Try the Investor Knowledge Quiz - Part 2

We’re back with Part two of the Investor Knowledge Quiz. Last week we started out with the first two questions in the quiz. If you missed them, you can catch up by using this link. Today we continue the quiz with the next two questions.

Question 3 deals with diversification.

The correct answer is:

Diversification decreases risk because your money is not held in one place and reliant solely on the rise in value of a single asset. Diversification provides a balance and enables your to potentially counter losses in one area with gains in another.

Question 4 continues with the risk theme, and looks at stock and mutual fund risk

The correct answer is:

Remember how diversification lowers risk? If you invest in a mutual fund you are investing in several different assets. An investment in a single stock is a single investment and beholden to it singular value.

We’ve now looked at the first four question in the Investor Knowledge Quiz. Are you on your way to scoring high on the quiz, or do you need to review more about investing? The quiz continues with the next two questions next week.