This quiz works best with JavaScript enabled. Home > Investments > Investment Management > Investment Management – Quiz 14 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Investment Management Quiz 14 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Diversification is important in investing because ..... A) It helps you to balance your risk across different types of investments. B) It increases your overall risk, which guarantees that you will make more money. C) It ensures that you only make low-risk investments. D) It helps you gain the highest rate of return despite any risks. Show Answer Correct Answer: A) It helps you to balance your risk across different types of investments. 2. Preference shareholders receive A) Fixed rate of dividend. B) Flexible rate of dividend. C) Fixed rate of interest. D) Flexible rate of interest. Show Answer Correct Answer: A) Fixed rate of dividend. 3. What is the sunk cost fallacy in the context of investment decisions? A) Evaluating investments based on potential future gains. B) Considering only current market conditions. C) Continuing an investment based on past costs rather than future benefits. D) Ignoring past investment performance. Show Answer Correct Answer: C) Continuing an investment based on past costs rather than future benefits. 4. What is the average annual return for savings? A) 0-2%. B) 2-4%. C) 4-6%. D) 6-10%. Show Answer Correct Answer: A) 0-2%. 5. Diversification is most effective when security returns are A) High. B) Negatively correlated. C) Positively correlated. D) Uncorrelated. Show Answer Correct Answer: B) Negatively correlated. 6. Which among the statements is the primary goal of income-oriented investment strategies? A) Capital appreciation. B) Maximizing portfolio volatility. C) Generating a steady stream of income. D) Short-term trading for quick profits. Show Answer Correct Answer: C) Generating a steady stream of income. 7. A professionally managed investment scheme A) Equity shares. B) Debentures. C) Bonds. D) Mutual funds. Show Answer Correct Answer: D) Mutual funds. 8. What is a bond rating agency responsible for? A) Managing stock market indices. B) Regulating bond markets. C) Assigning credit ratings to bonds to assess their creditworthiness. D) Administering government bonds. Show Answer Correct Answer: C) Assigning credit ratings to bonds to assess their creditworthiness. 9. Which among is a key characteristic of active investing? A) Aiming to replicate the performance of a specific market index. B) Seeking to outperform the market through strategic buying and selling. C) Holding investments for the long term without active management. D) Relying on market trends and momentum for decision-making. Show Answer Correct Answer: B) Seeking to outperform the market through strategic buying and selling. 10. Within the boundaries of appropriate levels of risk, maturity, and marketability, the treasurer can then pick the investment with the highest risk. A) TRUE. B) FALSE. Show Answer Correct Answer: B) FALSE. 11. What is the capital market line? A) Capital allocation line using market-index portfolio as risky asset. B) Money market instruments. C) Risk of CDs and commercial paper is miniscule to most assets. D) Investment policy that avoids security analysis. Show Answer Correct Answer: A) Capital allocation line using market-index portfolio as risky asset. 12. Investors seeking to avoid actively managing their portfolios will prefer which of the following assets A) Common stock. B) Commercial bank deposits. C) Financial futures. D) Real estate. Show Answer Correct Answer: B) Commercial bank deposits. 13. Fixed principal investments? A) Savings, government bonds. B) FD, PPF, Mutual Fund. C) Shares, Debt. D) LIC. Show Answer Correct Answer: A) Savings, government bonds. 14. Land is liquid asset. A) True. B) False. Show Answer Correct Answer: B) False. 15. It refers to the professional practice of overseeing and managing an individual's or organization's investment portfolio, typically involving activities like asset selection, portfolio diversification, risk assessment, and performance monitoring. A) Investment Management Controls. B) Investment Management. C) Investment Reporting. D) Investment Journal Entries. Show Answer Correct Answer: B) Investment Management. 16. 19) Which of the following is most interested in the economic, social and environmental effectiveness of the project: A) Investor. B) Government level. C) Bank. D) State budget agency. Show Answer Correct Answer: B) Government level. 17. Risk and Return are A) Directly Related. B) Indirectly Related. C) Not Related. D) None of the above. Show Answer Correct Answer: A) Directly Related. 18. The process of putting cash aside so it can be used in the short term and on minimal notice. A) Investing. B) Savings. Show Answer Correct Answer: B) Savings. 19. There should not be a foundation for both the size and duration of an investment. Otherwise, there is a potential for a disconnect between the demand for cash and its accessibility, which can lead to liquidity issues or an excess of idle cash. A) TRUE. B) FALSE. Show Answer Correct Answer: B) FALSE. 20. An investor invests 30 percent of his wealth in a risky asset with an expected rate of return of 0.13 and a variance of 0.03 and 70 percent in a T-bill that pays 6 percent. His portfolio's expected return and standard deviation are ..... and ....., respectively. A) 0.114; 0.128. B) 0.087;0.063. C) 0.295; 0.125. D) 0.081; 0.052. Show Answer Correct Answer: D) 0.081; 0.052. ← PreviousNext →Related QuizzesInvestments QuizzesInvestment Management Quiz 1Investment Management Quiz 2Investment 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