Canadian News Service
Some bond funds can be much riskier than other such funds. And some methods of purchasing stocks are riskier than others.
This multiple-choice investment quiz includes questions about these and other aspects of investing. The source for each correct answer is listed with the answers.
(1) Place the following investment options in order, from the least risky to the most risky:
(a) Bond funds holding only provincial bonds;
(b) Funds holding only Government of Canada bonds;
(c) Funds holding only investment grade Canadian corporate bonds;
(d) Greek bond funds.

(2) What are margin accounts?
(a) An investment account where gains or losses are limited to marginal amounts;
(b) An investment account where the investment dealer lends a client part of the purchase price of securities;
(c) An account in which only bonds can be held;
(d) None of the above.

(3) Are margin investment accounts:
(a) Conservative-type investment vehicles;
(b) Primarily used to buy bonds;
(c) Widely considered to be highly risky;
(d) The most common of all types of investment accounts.

(4) What is a "back end load?"
(a) You have to pay back 20 per cent of any mutual fund gains;
(b) A bond where the interest rate doubles in the final five years;
(c) A fee (on a sliding scale) you will have to pay if you sell your units in a "back end mutual fund" before a specific number of years passes;
(d) None of the above.

ANSWERS
1. In order of least risky: (b) Canada bonds, (a) provincial bonds, (c) investment grade corporate bonds, (d) Greek bonds. Source: Canadian News Service.

2. (b) An investment account where the investment dealer lends a client part of the purchase price of securities. Many investment firms will advance up to 50 per cent of the value of securities in a margin account if the client holds acceptable collateral. Source: www.morningstar.ca.

3. (c) Margin accounts are highly risky investment strategies used by sophisticated investors. In a falling market, the investment dealer may make a "margin call," requiring the client to put more money into the account, which might force the client to sell stock during the market decline. Source: www.morningstar.ca.

4. (c) A fee you will have to pay if you sell your units in a "back end mutual fund" before a specific number of years passes. Source: Internet Wealth Builder newsletter, This e-mail address is being protected from spambots. You need JavaScript enabled to view it