"Answers to Lowell Sun Investment Quiz"
1.
Put the following investments in order from best to worst performing
over the last 10 years.
Bonds
Certificates of Deposit
Emerging Market Stocks
U.S. Stocks
Correct
Answer:
Emerging Market Stocks 9.7%
Bonds 6.1%
Certificates of Deposit 3.6%
U.S. Stocks -1.0%
2.
Which of the following indices best represents the U.S. stock
market?
Dow
Jones
S&P 500
Nasdaq
Wilshire 5000
Correct
Answer: Wilshire 5000
Though almost
all media attention goes to the Dow Jones and S&P 500, The
Wilshire 5000 represents the entire U.S. equity market and is
comprised of all publicly-traded stocks.
3.
_________ is the oldest company listed in the Dow Jones Industrial
Index
General
Electric
AT&T
General Motors
Proctor & Gamble
Correct
Answer: General Electric, Added in November 7th, 1907
4.
Duration is a measure of a bond fund's sensitivity to ________
Inflation
Interest rates changes
The value of the dollar
None of the above
Correct Answer: Interest Rate Changes
For example,
a bond fund with a duration of 5 years, means that a, 1% increase
in interest rates would cause the fund to lose about 5% of its
value. Conversely, a 1% decrease in interest rates would increase
the funds value by 5%
5.
Under which of the following conditions will you pay a 10% penalty
if you withdraw contributions from your Roth IRA before age 591/2?
Disability
Childs college education
To pay for a vacation
All of the above
None of the above
Correct
Answer: None of the above
With a Roth
IRA, you can always withdraw contributions at any age, for any
reason, tax and penalty free.
6.
The minimum age to set up a Roth IRA is ____.
17
18
20
There is no minimum age
Correct
Answer: There is no minimum age
Although it
is a retirement account, a Roth IRA for 2009 can be opened at
any age by anyone with earned income below $120,000 for single
filers and $176,000 for joint filers.
7.
The Roth IRA accounts for ________ percent of all the retirement
plans being used.
5
15
20
25
Correct
Answer: 20 percent
Ninety percent
of Americans are eligible to invest in a Roth IRA, however only
20 percent choose to do so.
8.
Which of the following is the best definition for a, "junk
bond?
1.
A bond that is rated as "below investment-grade"
2. A bond that has declined dramatically in value
3. A bond that has defaulted
Correct
Answer: A bond rated "below investment grade"
To attract
investors, "junk" bonds typically pay higher yields
than higher rated corporate bonds.
9.
From 1980 to 2007 the price of gold increased ______
0 percent
50 percent
200 percent
500 percent
Correct
Answer: 0 percent
10.
True of False
Over the last 40 years, U.S Treasury Bonds have outperformed the
U.S. Stock Market.
Correct
Answer: True
Since 1968, the S&P 500 has had an annualized return of 8.4%.
The 20-year U.S. Treasury bond returned 8.5%.
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