Financial literacy means financial security
I thought it might be enlightening to present a quiz so readers can test their knowledge. The first three questions come from a similar exercise compiled by FINRA, a securities regulatory body. (You can find that quiz at http://apps.finra.org/quiz/1/investorquiz.aspx.) The other questions, and the commentary in the answer key, are my own.
1. In general, if interest rates go down, then bond prices...
A. Go down.
B. Go up.
C. Are not affected.
2. Which of the following is the best definition of a "junk" bond?
A. A bond that is rated as "below investment grade" by rating agencies
B. A bond that has declined substantially in value
C. A bond that has defaulted
D. A bond that is not regulated
3. Which of the following organizations insures you against losses in the stock market?
A. FDIC (Federal Deposit Insurance Corporation)
B. FINRA (Financial Industry Regulatory Authority)
C. SEC (Securities and Exchange Commission)
D. SIPC (Securities Investor Protection Corporation)
E. None of the above
4. Which of the following statements are true regarding small claims court?
A. You are not required to bring a lawyer if you are a plaintiff.