Test your knowledge of investing with this quiz

Published Sunday, January 28, 2001

(NUI) - Are you one of millions of Americans investing in the stock market? In 1999, an estimated 78.7 million individuals owned stocks either in mutual funds, individually or both - up from 69.3 million in 1995, according to Securities Industry Association. But even though "everyone's doing it," how much basic investing terminology do we really understand?

Test your investing IQ with the following quiz provided by Fidelity Investments. The answers are provided at the end of the quiz.

1. If you want to buy an active stock as quickly as possible, you should

place a:

a) Limit order.

b) Market order.

c) Good until canceled order.

d) Buy now order.

2. Professional management, diversification and potentially lower volatility are some reasons investors turn to mutual funds as an investment alternative.

a) True.

b) False.

3. A penny stock is:

a) Another name for copper stocks.

b) A term for investing wisely.

c) A stock typically priced under $1.

d) A stock priced between $1 and $5.

4. The common stock of a company with a long record of profit growth, consistent dividend payments and reputable management is called a:

a) Hot stock.

b) Blue chip stock.

c) Big cap stock.

d) Mid-cap stock.

5. Online trading is a 90s term to describe investors who:

a) Trade via the telephone.

b) Trade on line.

c) Trade at their financial limit.

d) Trade via the Internet.

6. The time period from today to an investor's desired goal is called what?

a) Forecasting.

b) Time horizon.

c) Investment plan.

d) Time zone.

7. Cash equivalents are short-term investments of such high liquidity and safety that they are virtually as good as cash.

a) True.

b) False.

8. A good reason for buying an index fund is:

a) Guaranteed income.

b) Guaranteed growth.

c) Low management fees.

d) Minimal diversification.

9. The total return from an investment includes dividends and capital gains or losses.

a) True.

b) False.

10. What is a group of stocks typically found in a single industry?

a) Sector.

b) Section.

c) Grouping.

d) Lot.

Questions were taken from Chart Climber - a Fidelity Investments Game. A wireless version of the game can be played from Palm handheld computers beginning in late October.

Answers: 1. a, 2. a, 3. c, 4. b, 5. d, 6. b, 7. a, 8. c, 9. a, 10. a.

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