Do You Know More Than the Average American About Investing? Financial advisor Jeff Rose reviews the answers to an online investing quiz most Americans failed.
Opinions expressed by Entrepreneur contributors are their own.
According to the CNBC article "The Average American Scored an "F' on This Investing Quiz — See How You Do," more than half of the 1,000 people surveyed for the financial site Magnifymoney failed to score above a 40% on a 10-question quiz about investing.
Financial advisor Jeff Rose provides the correct answers to the questions from the quiz with explanations for each. The questions from the quiz are:
- Which best describes your understanding of compound interest?
- What is the S&P 500?
- True or false: When you purchase a stock, that means you're a partial owner of the company.
- What is a dividend?
- How is a company's share price determined?
- What is the Dow Jones?
- True or false: Novice investors should focus on timing the market to maximize their investments.
- What does it mean when a stock has a high P/E ratio?
- How long do you have to hold a stock for it to be considered a long-term investment for tax purposes?
- Do all stocks pay dividends to investors?