Quiz: Stocks, Bonds, and Mutual Funds 4 questions · 80% to pass 1. Owning a stock means you:Loaned money to a companyOwn a fractional share of that companyAre guaranteed dividend paymentsHave a fixed-income securityA stock represents ownership (equity) in a company. You own a fraction of the business and participate in its gains and losses. Bonds are loans; stocks are ownership.2. When you buy a bond, you are:Buying ownership in a companyLending money to the issuer in exchange for regular interest paymentsBuying an index fundPurchasing insurance against market lossA bond is a loan. You lend money to a government or corporation, they pay you interest (coupon) on a schedule, and return your principal at maturity.3. A mutual fund provides diversification because it:Is guaranteed by the governmentPools money from many investors to buy a basket of different securitiesOnly invests in bondsEliminates all investment riskMutual funds pool capital from many investors to purchase a diversified portfolio of stocks, bonds, or other securities. This spreads risk across many holdings.4. When interest rates rise, existing bond prices generally:Rise proportionallyStay the sameFall, because new bonds pay higher couponsAre unaffectedWhen new bonds offer higher interest rates, existing bonds with lower rates become less attractive, so their market price drops to compensate. This is interest rate risk. Check answers Retake quiz Back to lesson Next lesson →