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How to choose a brokerage firm
Contributed by: Roe
  • 1. What is the primary purpose of a brokerage firm?
A) To facilitate the buying and selling of securities.
B) To manage personal bank accounts.
C) To guarantee investment returns.
D) To provide financial advice only.
  • 2. Which of these is a key factor to consider when selecting a brokerage?
A) Fees and commissions.
B) The color of their logo.
C) The brand of coffee they serve.
D) The proximity to your home.
  • 3. What is a commission fee?
A) A fee for opening an account.
B) A fee charged per trade.
C) A yearly membership fee.
D) A fee for financial advice.
  • 4. What is an example of a security you can buy through a brokerage?
A) A house.
B) Stocks.
C) A car.
D) Groceries.
  • 5. What does SIPC insurance protect?
A) Cash and securities in your brokerage account.
B) Your investment gains.
C) Your home and car.
D) Against market losses.
  • 6. What type of research tools should a good brokerage offer?
A) Fortune telling and astrology charts.
B) Coffee brewing tutorials.
C) Reality television show reviews.
D) Market analysis and stock screeners.
  • 7. What is a robo-advisor?
A) A robot that trades stocks directly.
B) A financial newspaper.
C) An automated investment platform.
D) A human financial advisor.
  • 8. What is the importance of understanding the brokerage's platform?
A) The length of their terms and conditions.
B) The complexity to impress others.
C) The aesthetic appeal of the website.
D) Ease of use for trading and account management.
  • 9. Which account type is typically tax-advantaged?
A) Debit card.
B) Retirement account (e.g., IRA).
C) Checking account.
D) Savings account.
  • 10. What is the significance of customer support?
A) To provide dating advice.
B) To sell you unrelated products.
C) To offer free haircuts.
D) Assistance with account issues and trading questions.
  • 11. What does 'due diligence' mean when choosing a brokerage?
A) Ignoring fees and regulations.
B) Thoroughly researching and comparing options.
C) Blindly trusting recommendations.
D) Only considering the cheapest option.
  • 12. Which of the following is NOT a typical brokerage service?
A) Options trading.
B) Mutual fund investing.
C) Stock trading.
D) Grocery delivery.
  • 13. What is a margin account?
A) An account with no fees ever.
B) An account where your money is guaranteed to grow.
C) An account that allows borrowing money to invest.
D) A free checking account.
  • 14. Why is it important to understand the risks involved in trading?
A) Because it is fun to gamble.
B) To avoid losing more money than you can afford.
C) To impress your friends with your trading knowledge.
D) To guarantee quick profits.
  • 15. Which of these is a type of order used to buy or sell securities?
A) Airline ticket.
B) Market order.
C) Grocery list.
D) Birthday card.
  • 16. What is day trading?
A) Buying and selling securities within the same day.
B) Trading only during your birthday.
C) Trading only once per year.
D) Trading only on weekends.
  • 17. What is diversification?
A) Spreading investments across different asset classes.
B) Keeping all your money in cash.
C) Never investing at all.
D) Investing all your money in one stock.
  • 18. What is a prospectus?
A) A recipe book.
B) A user manual for a car.
C) A financial newspaper.
D) A document detailing investment risks and objectives.
  • 19. What does 'FINRA' stand for?
A) Financial Investment Network Revenue Agency.
B) Financial Industry Regulatory Authority.
C) Federal Insurance National Retirement Association.
D) Federal Investigation of National Resources Administration.
  • 20. What is the difference between a full-service broker and a discount broker?
A) Full-service brokers are cheaper, discount brokers are expensive.
B) Full-service brokers only trade in penny stocks.
C) Full-service brokers offer advice, discount brokers do not.
D) Discount brokers guarantee profits.
  • 21. What is a DRIP?
A) Dividend Reinvestment Plan.
B) Debt Reduction Incentive Package.
C) Dividend Revenue Investment Project.
D) Daily Rest Investment Program.
  • 22. What is the best way to compare brokerage firms?
A) Choose the firm your neighbor uses.
B) Pick the brokerage firm with the catchiest jingle.
C) Select the one that sends the most junk mail.
D) Review their fee structures, services and research tools.
  • 23. Which of the following should influence your brokerage choice?
A) The opinions of random people online.
B) Your investment goals and experience level.
C) The advice of someone with no investing experience.
D) What your favorite celebrity uses.
  • 24. What is the advantage of a no-commission brokerage?
A) No risk of loss.
B) Lower trading costs.
C) Guaranteed profits.
D) Free money for signing up.
  • 25. What is an ETF?
A) Exchange Traded Fund.
B) Equity Transfer Form.
C) Electronic Transfer Fund.
D) Easy Trading Format.
  • 26. Why is it important to read customer reviews before choosing a brokerage?
A) Because reviews guarantee future performance.
B) Because all reviews are always accurate.
C) To find the brokerage with the most negative reviews.
D) To get insights into the user experience.
  • 27. What type of account is typically used for retirement savings?
A) 401(k) or IRA.
B) Savings account.
C) Money market account (for short term savings).
D) Checking account.
  • 28. What is the best defense against investment fraud?
A) Greed.
B) Ignoring warning signs.
C) Skepticism and research.
D) Blind trust.
  • 29. When should you re-evaluate your choice of brokerage firm?
A) Never, once you pick one you're stuck.
B) When the stock market crashes.
C) When your investment needs change.
D) Every day.
  • 30. What is the difference between a taxable brokerage account and a retirement account?
A) Retirement accounts offer tax advantages.
B) Retirement accounts have no investment options.
C) Taxable accounts are only for the wealthy.
D) There is no difference.
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