Investing quiz

✓ Right: an investor's return comes mainly from the value an asset produces over time, a trader's from price moves.

✗ Investments can fall a lot and a single company can go to zero, so investing can lose money too.

✗ It is often the other way round: many retail traders use contracts such as CFDs and own nothing.

✗ They differ in time horizon, in what you own and in what it costs you to be wrong.

✗ The green zero means you lose 19 times in 37 and win only 18 times in 37.

✓ Right: on average you lose €10 ÷ 37, about €0.27, on every bet, and no strategy changes that.

✗ That is 27% of the bet; the real house edge is about 2.7%, so €0.27 on €10.

✗ Each spin is independent, so past losses do not change the odds of the next one.

✗ That is the value after one year, not after ten.

✗ That is simple growth, where you take the €50 out every year instead of leaving it invested.

✓ Right: 1.05 to the power of 10 is about 1.629, because each year's growth also grows.

✗ Doubling at 5% takes about 14 years (72 ÷ 5), not 10.

✗ That mixes up the rate and the years; the rule divides 72 by the rate.

✗ That is how long simple growth takes (100 ÷ 8), but compounding is faster.

✗ About 16 years would mean roughly 4.5% a year, not 8%.

✓ Right: 72 ÷ 8 = 9, so money roughly doubles in about 9 years at 8%.

✗ Prices do not always rise; markets can fall for years.

✓ Right: in the lesson example, a perfect 10% discount after five years of waiting still ended behind.

✗ Fees do not depend on when you start; time helps through compounding.

✗ Nobody can reliably see it in advance, which is exactly why waiting for it is costly.

✗ The fund holds the shares; you hold units of the fund.

✗ That describes a CFD, which gives no ownership at all.

✗ A fund is not a savings account; there is no fixed interest and no guarantee.

✓ Right: each unit is a small slice of everything the fund holds.

✗ That would be equal weights, but this index weights each company by its size.

✓ Right: the bigger company is €800 of €1,000 billion, or 80%, and 80% of €500 is €400.

✗ That would be a 90% weight, but the bigger company is 80% of the total.

✗ The fund copies the whole index, so part of the money also goes into the smaller company.

✗ Only one of the 40 companies failed; the other 39 parts are still there.

✗ Each company got €2,000 ÷ 40 = €50, not €500.

✗ Diversification makes one failure small; it does not make it disappear.

✓ Right: each company got €50, so one total failure costs €50, which is 2.5% of the money.

✓ Right: things that move together give little protection against each other.

✗ Low correlation means they move more separately, which is the opposite of this case.

✗ If they move together, they can lose together.

✗ Correlation describes how two things move, not what type of asset they are.

✓ Right: €6,000 must grow by €2,000, and €2,000 is about 33.3% of €6,000.

✗ The fall was 25%, but 25% of €6,000 is only €1,500, which takes you to €7,500.

✗ 20% of €6,000 is €1,200, which only takes you to €7,200.

✗ 50% of €6,000 is €3,000, which would take you to €9,000, more than you need.

✗ After two years it was still falling; it hit bottom in 1932.

✗ Five years is closer to the recovery after the 2007 peak, not the 1929 one.

✓ Right: it fell about 89% and did not return to its 1929 level until November 1954.

✗ It did return, but only after about 25 years.

✗ That is only the difference in the first year; the fee is charged again every year for 25 years.

✗ That is 1.9% of €10,000 times 25, but fees come from a growing balance and the lost money also stops growing.

✓ Right: about €33,066 with the 0.1% fee against about €20,938 with the 2% fee.

✗ That is the whole growth with no fee at all; the 2% fee does not take all of it.

✗ The fee is 2% of your balance, but compared with a 6% return it is a much bigger share.

✗ About 4 percentage points is what you keep, not what the fee takes.

✓ Right: 2 of the 6 percentage points go to the fee, which is one third of the return.

✗ You would still keep 4 of the 6 percentage points, if the 6% really happened.

✗ That is what you would have if you had held, but you sold at half price.

✗ Selling left you €500 in total, and buying back at €100 does not add anything.

✗ You still own 5 units; panic selling halved your money here, it did not wipe it out.

✓ Right: selling 10 units at €50 gave you €500, which buys back only 5 units at €100.

✗ €15 is the average of the two prices, but you bought more units at the lower price.

✗ Only the second purchase was at €10; the first 5 units cost €20 each.

✓ Right: you bought 5 units plus 10 units, so 15 units for €200, or about €13.33 each.

✗ Only the first purchase was at €20; the second bought twice as many units at €10.