Investing: Why You Should Diversify Practice Questions | Marginal Revolution University

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Practice Questions

Investing: Why You Should Diversify Practice Questions

1. There are three stocks available: a solar energy firm, an oil firm, and an airline. You can invest in two. Which two?  (Hint: think about the rule of diversification.) *

a. solar energy firm and oil firm

b. solar energy and airline firm

c. oil firm and airline firm

2. Which of the following would be the least risky thing for you to do if you work as a real estate agent? *

a. Invest in construction companies.

b. Buy a house.

c. Marry a doctor.

d. Buy mortgage-backed securities.

e. a and b only.

3. Let’s assume that your mutual fund grows at an average rate of 7% per year—before subtracting the fees. Using the rule of 70: Approximately how many years will it take for your money to double if fees are 0.5% per year? *

a. 8.1 years

b. 9.3 years

c. 10 years

d. 10.8 years

e. 11.2 years

4. Using the same assumption as question 3, and the rule of 70: Approximately how many years will it take for your money to double if fees are 1.5% per year  (not uncommon in the mutual fund industry)?   *

a. 8.2 years

b. 9.5 years

c. 10 years

d. 11.4 years

e. 12.7 years

5. Using the same assumption as question 3, and the rule of 70: Approximately how many years to double if fees are 2.5% per year?   *

a. 7.4 years

b. 11.5 years

c. 13. 5 years

d. 15.5 years

e. 16.3 years

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Principles of Economics Macroeconomics

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GDP

What Is Gross Domestic Product (GDP)?

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Nominal vs. Real GDP

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Real GDP Per Capita and the Standard of Living

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The Wealth of Nations and Economic Growth

Basic Facts of Wealth

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Growth Rates Are Crucial

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What Caused the Industrial Revolution?

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Growth Miracles and Growth Disasters

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The Importance of Institutions

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Geography and Economic Growth

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The Puzzle of Growth

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Growth, Capital Accumulation, and the Economics of Ideas

Introduction to the Solow Model

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Physical Capital and Diminishing Returns

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The Solow Model and the Steady State

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Office Hours: The Solow Model

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Human Capital and Conditional Convergence

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The Solow Model and Ideas

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Office Hours: The Solow Model: Investments vs. Ideas

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The Economics of Ideas

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Patents, Prizes, and Subsidies

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The Idea Equation

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TED Talk: How Ideas Trump Crises

Savings, Investment, and the Financial System

Saving and Borrowing

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What Do Banks Do?

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Intro to Stock Markets

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Intro to the Bond Market

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Office Hours: The Bond Market

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Four Reasons Financial Intermediaries Fail

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The Great Recession

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Personal Finance

How Expert Are Expert Stock Pickers?

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Can You Beat the Market?

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Investing: Why You Should Diversify

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Who Is More Rational? You or the Market?

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Econ Duel: Rent or Buy?

Unemployment and Labor Force Participation

The Economics of Choosing the Right Career

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Defining the Unemployment Rate

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Is Unemployment Undercounted?

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Frictional Unemployment

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Structural Unemployment

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Cyclical Unemployment

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Labor Force Participation

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Women Working: What’s the Pill Got to Do With It?

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Inflation and Quantity Theory of Money

Zimbabwe and Hyperinflation: Who Wants to Be a Trillionaire?

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Measuring Inflation

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Quantity Theory of Money

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Causes of Inflation

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Costs of Inflation: Price Confusion and Money Illusion

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Costs of Inflation: Financial Intermediation Failure

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Inflation Throughout the Ages: What Would You Do?

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Office Hours: Costs of Inflation

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Why Governments Create Inflation

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Business Fluctuations

Intro to Business Fluctuations

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The Aggregate Demand Curve

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The Long-Run Aggregate Supply Curve

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The Short-Run Aggregate Supply Curve

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Changes in Velocity

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Understanding the Great Depression

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Office Hours: Using the AD-AS Model

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Office Hours: Multiple Shocks with the AD-AS Model

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Business Cycle Theories

Game of Theories: The Keynesians

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Game of Theories: The Monetarists

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Game of Theories: Real Business Cycle

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Game of Theories: The Austrians

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Game of Theories: The Great Recession

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Monetary Policy and the Federal Reserve

Monetary Policy and the Fed

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The U.S. Money Supplies

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The Money Multiplier

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How the Fed Worked: Before the Great Recession

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How the Fed Works: After the Great Recession

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The Federal Reserve as Lender of Last Resort

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Monetary Policy: The Best Case Scenario

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Monetary Policy: The Negative Real Shock Dilemma

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When the Fed Does Too Much

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Fiscal Policy

Introduction to Fiscal Policy

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Fiscal Policy: The Best Case Scenario

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The Limits of Fiscal Policy

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The Dangers of Fiscal Policy

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Fiscal Policy and Crowding Out

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Principles of Economics: Macroeconomics

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