This quiz works best with JavaScript enabled. Home > Finance > Investments > Investment Management > Investment Management – Quiz 2 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Investment Management Quiz 2 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. How does diversification affect the risk-return tradeoff in a portfolio? A) Diversification increases risk and reduces potential returns. B) Diversification reduces risk without impacting potential returns. C) Diversification increases both risk and potential returns. D) Diversification has no impact on the risk-return tradeoff. Show Answer Correct Answer: B) Diversification reduces risk without impacting potential returns. 2. Other investment tool in which they receive money from investors with the common objective of pooling the funds and then investing them in securities according to a stated set of investment objectives. A) Investment companies. B) Investment funds. C) Insurance companies. D) Both A and B. Show Answer Correct Answer: D) Both A and B. 3. How might ethical investors engage with local communities to support economic development? A) Avoiding any involvement in community development initiatives. B) Prioritizing investments in communities with minimal social challenges. C) Collaborating with local stakeholders to understand and address community needs. D) Ignoring community input and making investment decisions independently. Show Answer Correct Answer: C) Collaborating with local stakeholders to understand and address community needs. 4. Question 4:How many main types of investment fund? A) 2. B) 4. C) 5. D) 3. Show Answer Correct Answer: D) 3. 5. As per Finance, Investment is A) Only Financial Product. B) Only Financial Services. C) Both. D) None of the above. Show Answer Correct Answer: C) Both. 6. An investor invests in assets is known as a ..... A) Securities. B) Block of Assets. C) Portfolio. D) None of th above. Show Answer Correct Answer: C) Portfolio. 7. What is Robbani in sharia investment philosophy, except? A) God as Something to believe in. B) Believe that the profits and losses that occur are the decision and ownership of Allah SWT. C) Aiming to cultivate a noble moral attitude, discipline, fulfilling one's promise, trust, fear of Allah SWT and not fearing the loss of the world. D) God as Witness and Watcher. Show Answer Correct Answer: A) God as Something to believe in. 8. What Is SPECULATION? A) High Risk & short-term approach. B) Quick return and diversification. C) Risk & Saving. D) Proper Planning. Show Answer Correct Answer: A) High Risk & short-term approach. 9. Short-term needs A) Save. B) Invest. Show Answer Correct Answer: A) Save. 10. In ethical investing, what is a common practice to evaluate the social impact of investments? A) Avoiding any investments with potential social or environmental risks. B) Engaging in social impact assessments and reporting. C) Conducting regular financial audits. D) Ignoring the social impact and focusing solely on financial returns. Show Answer Correct Answer: B) Engaging in social impact assessments and reporting. 11. Global macro hedge funds typically: A) Invest exclusively in one market or region. B) Focus on individual stocks and bonds. C) Take positions based on macroeconomic trends and geopolitical events. D) Ignore economic indicators and market trends. Show Answer Correct Answer: C) Take positions based on macroeconomic trends and geopolitical events. 12. What happens to the portfolio risk and return respectively as an investor moves up the CML? A) Risk increases, return decreases. B) Risk increases, return decreases. C) Risk increases, return increases. D) None of above. Show Answer Correct Answer: C) Risk increases, return increases. 13. How are qualified dividends typically taxed in the United States? A) Subject to a flat capital gains tax rate. B) Exempt from taxation. C) Subject to a lower capital gains tax rate. D) Taxed at ordinary income rates. Show Answer Correct Answer: C) Subject to a lower capital gains tax rate. 14. They are equity security, which has infinitive life and pay dividends. It is attributed to the type of fixed-income securities, because the dividend is fixed in amount and known in advance. A) Speculative investment. B) Preferred stocks. C) Long-term debt securities. D) The common stock. Show Answer Correct Answer: B) Preferred stocks. 15. What does a long/short equity hedge fund strategy involve? A) Only taking long positions in individual stocks. B) Balancing long positions with short positions on individual stocks. C) Avoiding individual stocks and focusing on index funds. D) Ignoring equity investments and focusing on fixed income. Show Answer Correct Answer: B) Balancing long positions with short positions on individual stocks. 16. 14 This policy is meant to stop an investment from being marked as ..... which would let management avoid reporting short-term changes in the investment's fair value in reported earnings. A) Marketable Equity Securities. B) Available for Sale. C) Held to Maturity. D) Trading Portfolio. Show Answer Correct Answer: B) Available for Sale. 17. Investment facilities in the past except? A) Land. B) Ricefield. C) House. D) Bond. Show Answer Correct Answer: D) Bond. 18. What is the principal? A) Beginning amount of money invested or borrowed. B) Extra money paid over time for borrowing money. C) Ending amount, total balance, current value. D) When you leave money in the bank and it makes money. Show Answer Correct Answer: A) Beginning amount of money invested or borrowed. 19. What best describes the typical investment horizon of growth investors? A) Patiently holding stocks for capital appreciation over time. B) Long-term commitment to stable dividend payments. C) Short-term focus on immediate returns. D) Seeking quick profits through market timing. Show Answer Correct Answer: A) Patiently holding stocks for capital appreciation over time. 20. When investors follow the crowd without independently analyzing information, it is referred to as: A) Herd mentality. B) Recency bias. C) Confirmation bias. D) Loss aversion. Show Answer Correct Answer: A) Herd mentality. 21. What does a history of consistent dividend growth often indicate about a company? A) Lack of financial stability. B) Dependence on short-term market trends. C) Strong financial health and stability. D) Preference for stock buybacks over dividends. Show Answer Correct Answer: C) Strong financial health and stability. 22. What is the term for a stock that pays regular dividends and is considered a stable investment with lower risk? A) Growth stock. B) Income stock. C) Penny stock. D) Value stock. Show Answer Correct Answer: B) Income stock. 23. Once you have built up an emergency fund you should A) Try to increase it. B) Start to invest. C) Spend some of it. D) None of above. Show Answer Correct Answer: B) Start to invest. 24. 10 Which of the statements is true? A) A portfolio's risk is likely to be smaller than the average of all stock's standard deviations, because diversification lowers the portfolio's risk. B) The effects of diversification, the portfolio's risk is likely to be more than the average of all stock's standard deviations. C) Portfolio risk will increase if more stocks that are negatively correlated with other stocks are added to the portfolio. D) The unsystematic risk component of the total portfolio risk can be increased by adding negatively correlated stocks to the portfolio. Show Answer Correct Answer: A) A portfolio's risk is likely to be smaller than the average of all stock's standard deviations, because diversification lowers the portfolio's risk. 25. Compared to venture capital, private equity investments typically have a: A) Predictable exit timeline. B) Shorter investment horizon. C) Fixed investment duration. D) Longer investment horizon. Show Answer Correct Answer: D) Longer investment horizon. 26. It is the sale of security with a commitment by the seller to buy the security back from the purchaser at a specified price at a designated future date. A) Repurchase Contract. B) Long-term debt securities. C) Security Agreement. D) Repurchase agreement. Show Answer Correct Answer: D) Repurchase agreement. 27. One advantage of passive investing over active investing is: A) Potential for higher returns. B) Higher management fees. C) Lower costs and fees. D) More frequent portfolio adjustments. Show Answer Correct Answer: C) Lower costs and fees. 28. Investment project, aimed at: A) Create new project. B) Expanding the project. C) Construction renovation. D) All sentences are correct. Show Answer Correct Answer: D) All sentences are correct. 29. Which psychological bias is characterized by the tendency to prefer avoiding losses rather than acquiring equivalent gains? A) Hindsight bias. B) Overconfidence bias. C) Anchoring bias. D) Loss aversion. Show Answer Correct Answer: D) Loss aversion. 30. What factors do we need to look at before we invest A) Liquidity. B) Safety. C) Return on Investment. D) All of the above. Show Answer Correct Answer: D) All of the above. ← PreviousNext →Related QuizzesInvestments QuizzesFinance QuizzesInvestment Management Quiz 1Investment Management Quiz 3Investment Management Quiz 4Investment Management Quiz 5Investment Management Quiz 6Investment Management Quiz 7Investment Management Quiz 8Investment Management Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books