Investment Definition Quiz

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By UnmatchedCanyon



27 Questions

What is the traditional definition of investment?

In finance, what is the purpose of investing?

What does a low-risk investment generally result in?

What is the term for money received in a series of several time periods?

What is the effect of diversification on overall risk?

What do investors generally expect from riskier investments?

What does the P/E ratio indicate for investors?

What is the main focus of growth investors?

Who is credited with popularizing the growth investing strategy in 1950?

What is the characteristic of stocks purchased for momentum investing?

In the process of the P/B ratio, what is not taken into account?

What is the focus of Venture Capital investing?

What type of market does momentum investing involve short-selling securities in?

What do growth investors seek profits through?

Which metric is likely to be higher for growth stocks compared to others in its industry?

What does the P/E ratio indicate about stock valuations?

What is the purpose of value investing?

Which type of investment involves entrusting capital to agents for trading and sharing profits?

What is the primary characteristic of private equity investments?

What do commodities typically refer to in the context of investments?

What represents ownership of a business?

What is the term for generating profit without investing or bearing risk?

What do foreign currency savings bear?

What is the characteristic of collectables in investment terms?

Which financial instrument involves investors sharing profits from trading?

In which type of investment can property risks be mitigated through mortgages and lower loan ratios?

What is the term used for investors in stocks, bonds, and securities in the early 1900s?


  • Modern financial investments include stocks, bonds, cash, real estate, private equity, other loans, commodities, collectables, carbon offsets, digital entities, and hedge funds.
  • Stocks represent business ownership, Bonds are loans, Cash is holding a currency, Real estate can be rented or resold, Private equity is in non-publicly traded businesses, Other loans include mortgages, Commodities are goods like gold or potatoes, Collectables are items like art or stamps, Carbon offsets are environmental credits, Digital entities are cryptocurrencies or NFTs, and Hedge funds use sophisticated techniques like derivatives and leverage.
  • Investment involves risk of loss of capital, unlike arbitrage which generates profit without investing or bearing risk.
  • Savings can default, and foreign currency savings bear exchange rate risk.
  • Property investment also has risks, which can be mitigated through mortgages and lower loan ratios.
  • Industry volatility influences investment risk, with biotechnology being particularly risky due to the high failure rate of products.
  • The qirad, an Islamic financial instrument, involved investors entrusting capital to agents for trading and sharing profits.
  • In the early 1900s, investors in stocks, bonds, and securities were called speculators, but the term investment came to denote more conservative securities.
  • Value investing involves buying undervalued securities using financial analysis and ratios like P/E.
  • Value investors, like Warren Buffett and Benjamin Graham, seek undervalued stocks and sell overvalued ones.
  • Graham and Dodd's Security Analysis was written after the 1929 stock market crash.
  • The P/E ratio is an important fundamental ratio for comparing stock valuations, with a lower P/E indicating a cheaper stock for the same level of financial performance.
  • Industry comparisons require considering P/E ratios in context, as normal ranges vary between industries.


Test your knowledge on the definition of investment and its broader viewpoint. This quiz will also cover the concept of net monetary receipt in a time period.

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