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What is your Stock Market IQ?
The Stock Market IQ Test is designed to assess how much you know about the stock market and equity investments. A good knowledge of the stock market is highly desirable since most people invest in stock markets either directly - by trading in stocks, bonds, mutual funds, etc, or indirectly - through their participation in retirement programs, college funds, stock grants, bonus stock options, IRA, 401K, etc. Take this test and find out if you really know as much as you think you know about stock markets!
1.   Which type of company can legally issue publicly traded common stock?
     Sole proprietorship
     General partnership
     Corporation
     All of these can issue stock
 
2.   What figure is closest to the historical annual return earned by the broad stock market?
     -10%
     5%
     10%
     20%
 
3.   If stocks typically provide a higher return to investors than other investments such as CDs or savings accounts, what might keep people from investing in the stock market?
     Risk; the potential for stock prices to decline
     A desire for guaranteed returns at a set interest rate
     A need for liquidity, i.e. the ability to quickly convert an investment to cash if needed
     Both A and B
 
4.   A 25 year old woman has $100,000 to invest for her retirement. Which portfolio mix is most appropriate for her stage in life?
     75% common stocks, 25% bonds
     50% common stocks, 50% short-term CDs
     25% common stocks, 25% short-term CDs, 50% 5 US Treasury bills
     50% short-term CDs, 50% long-term CDs
 
5.   A 62 year old man has $300,000 to invest and is concerned with capital preservation. Which portfolio best suits his needs?
     100% common stocks
     75% common stocks, 25% short-term CDs
     75% common stocks, 25% speculative grade bonds
     25% short-term CDs, 50% long-term CDs, 25% investment grade bonds
 
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