1. Who insures investments?

  The Securities and Exchange Commission
  Federal Deposit Insurance Corporation
  State security regulators
  None of the above

2. What is a promissory note?

  A note that “promises” your investment is safe.
  A legitimate loan if it’s broadly marketed to many people, over the Internet, for example.
  A kind of security.
  An investment that promises to deliver very high rates of return over a very short term.

3. Which statement is true about insurance agents and investments?

  Are allowed to sell many kinds of investments because they are licensed to sell insurance.
  Sometimes make high commissions by persuading people to make certain investments.
  Only sell investments that are 100% backed by their company.

4. Before investing in a friend’s investment, you should…

  Get in on the deal as quickly as possible so you don’t lose the opportunity.
  Take the time to find out all you can about it, even if it means missing out on the investment.
  Check with your state security regulator or the Securities and Exchange Commission to make sure it can be legally sold in your state.
  Both finding out all you can and checking with your state security regulator or SEC.

5. What is a viatical?

  A road constructed by the ancient Romans
  A garment worn by the clergy
  A very small blood vessel
  An agreement to purchase another’s life insurance policy

6. Which scams were recently in the news?

  Access to “abandoned” bank accounts
  Products to combat chemical or biological terrorism
  Oil field leases
  All of the above

7. In 2005, Americans reported losing how much to Internet frauds?

  $63 million
  $102 million
  $183 million
  $206 million

8. The most important thing in deciding about an investment is your personal connection to the person offering it.

  True
  False

9. As an investment, gold coins:

  Are rare, so they’re bound to be valuable
  Always go up in value at a good rate
  Are a good investment because of the gold content
  Can be a good investment, but only if you’re very knowledgeable about them

10. Which of these statements about variable annuities is true?

  Is a good addition to any investor’s portfolio.
  Allows you to withdraw your investment whenever you want, with no penalty.
  Is not usually a good investment for older people.
  Begin producing regular payments whenever you decide you need the money.

11. Which is a true statement about pyramid schemes?

  Offers investors a free trip to Egypt
  Can only go on for a short time before investors lose out
  Is a good way to make money, because it just keeps growing
  Guarantees that you will at least make your principal back

12. Which of the following lines should make you nervous about an investment?

  "You'll get a much higher rate of return than other investments."
  "You must act quickly."
  "This is risk free."
  All of the above

13. You receive an invitation to a free financial seminar and lunch, and you decide to attend it. The financial advisor strongly recommends that you make certain investments as soon as possible. He seems like a good, down-to-earth guy with your best interests at heart. You should:

  Enjoy the meal, but be skeptical about the advice.
  Trust your instincts about human nature and sign on to the investment.
  Take your time and learn more about the investments being offered.
  Enjoy the meal, be skeptical, take your time and learn about the investment.