This quiz works best with JavaScript enabled. Home > Investments > Investment Management > Investment Management – Quiz 3 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Investment Management Quiz 3 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. 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. 2. 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. 3. How are qualified dividends typically taxed in the United States? A) Taxed at ordinary income rates. B) Subject to a flat capital gains tax rate. C) Exempt from taxation. D) Subject to a lower capital gains tax rate. Show Answer Correct Answer: D) Subject to a lower capital gains tax rate. 4. 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) The common stock. B) Speculative investment. C) Preferred stocks. D) Long-term debt securities. Show Answer Correct Answer: C) Preferred stocks. 5. 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. 6. 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) Held to Maturity. B) Available for Sale. C) Trading Portfolio. D) Marketable Equity Securities. Show Answer Correct Answer: B) Available for Sale. 7. Investment facilities in the past except? A) Land. B) Ricefield. C) House. D) Bond. Show Answer Correct Answer: D) Bond. 8. 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. 9. What best describes the typical investment horizon of growth investors? A) Short-term focus on immediate returns. B) Long-term commitment to stable dividend payments. C) Seeking quick profits through market timing. D) Patiently holding stocks for capital appreciation over time. Show Answer Correct Answer: D) Patiently holding stocks for capital appreciation over time. 10. When investors follow the crowd without independently analyzing information, it is referred to as: A) Confirmation bias. B) Herd mentality. C) Loss aversion. D) Recency bias. Show Answer Correct Answer: B) Herd mentality. 11. 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. 12. What is the term for a stock that pays regular dividends and is considered a stable investment with lower risk? A) Growth stock. B) Value stock. C) Income stock. D) Penny stock. Show Answer Correct Answer: C) Income stock. 13. 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. 14. 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. 15. Compared to venture capital, private equity investments typically have a: A) Shorter investment horizon. B) Longer investment horizon. C) Fixed investment duration. D) Predictable exit timeline. Show Answer Correct Answer: B) Longer investment horizon. 16. 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) Security Agreement. B) Long-term debt securities. C) Repurchase agreement. D) Repurchase Contract. Show Answer Correct Answer: C) Repurchase agreement. 17. 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. 18. 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. 19. Which psychological bias is characterized by the tendency to prefer avoiding losses rather than acquiring equivalent gains? A) Overconfidence bias. B) Loss aversion. C) Anchoring bias. D) Hindsight bias. Show Answer Correct Answer: B) Loss aversion. 20. 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 QuizzesInvestment Management Quiz 1Investment Management Quiz 2Investment Management Quiz 4Investment Management Quiz 5Investment Management Quiz 6Investment Management Quiz 7Investment Management Quiz 8Investment Management Quiz 9Investment Management Quiz 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books