This quiz works best with JavaScript enabled. Home > Investments > Investment Management > Investment Management – Quiz 6 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Investment Management Quiz 6 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Investors who overestimate their abilities and underestimate the risks involved in investment decisions are exhibiting: A) Confirmation bias. B) Hindsight bias. C) Overconfidence bias. D) Anchoring bias. Show Answer Correct Answer: C) Overconfidence bias. 2. Siti is a risk-averse investor, David is a less risk-averse investor than Siti. Therefore, A) For the same return, David tends to tolerate higher risk than Siti. B) For the same risk, Siti requires a lower rate of return than David. C) For the same risk, David requires a higher rate of return than Siti. D) For the same return, Siti tolerates higher risk than David. Show Answer Correct Answer: A) For the same return, David tends to tolerate higher risk than Siti. 3. All the investors moneys are poled together in a ..... A) Scheme. B) Portfolio. C) Funds. D) None of above. Show Answer Correct Answer: A) Scheme. 4. The correlation coefficient is A) A way to summarise and describe our data but do not allow us to make a conclusion related to our hypothesis. B) Is the relationship between two sets of variables used to describe or predict information. C) Is a measure of the linear correlation between two variables X and Y, giving a value between +1 and-1 inclusive, where 1 is total positive correlation, 0 is no correlation and-1 is total negative correlation. D) Is an aggregate market movement, the largest single factor explaining the fluctuations. Show Answer Correct Answer: C) Is a measure of the linear correlation between two variables X and Y, giving a value between +1 and-1 inclusive, where 1 is total positive correlation, 0 is no correlation and-1 is total negative correlation. 5. Which is the most liquid investment instrument A) House. B) Land. C) Shares. D) It's not. Show Answer Correct Answer: C) Shares. 6. Which of the following correctly orders the investments from LOWER risk to HIGHER risk? A) Treasury bond-Stock-Diversified mutual fund. B) Stock-Treasury bond-Diversified mutual fund. C) Treasury bond-Diversified mutual fund-Stock. D) Diversified mutual fund-Treasury bond-Stock. Show Answer Correct Answer: C) Treasury bond-Diversified mutual fund-Stock. 7. Is a characteristic of financial assets that reflects the feasibility of converting of the asset into cash quickly andwithout affecting its price significantly. A) Liquidity. B) Marketability. C) Information availability. D) Both A and B. Show Answer Correct Answer: D) Both A and B. 8. What is the role of a stockbroker in the stock market? A) To manufacture stocks. B) To regulate stock trading. C) To facilitate the buying and selling of stocks on behalf of investors. D) To audit financial statements of publicly traded companies. Show Answer Correct Answer: C) To facilitate the buying and selling of stocks on behalf of investors. 9. Treasury bills are commonly viewed as risk-free assets because: A) Their short-term nature makes their values insensitive to interest rate fluctuations. B) The inflation uncertainty over their time to maturity is negligible. C) Their term to maturity is identical to most investors' desired holding periods. D) Both their short-term nature makes their values insensitive to interest rate fluctuations and the inflation uncertainty over their time to maturity is negligible. Show Answer Correct Answer: D) Both their short-term nature makes their values insensitive to interest rate fluctuations and the inflation uncertainty over their time to maturity is negligible. 10. Which of these statements is the core principle of ethical investing? A) Maximizing financial returns without regard to social or environmental impact. B) Prioritizing investments in industries with a history of ethical concerns. C) Balancing financial goals with positive social, environmental, and governance outcomes. D) Ignoring ethical considerations in favor of short-term profits. Show Answer Correct Answer: C) Balancing financial goals with positive social, environmental, and governance outcomes. 11. Efficient frontier is what kind of a curve A) Concave. B) Convex. C) Parallel. D) Perpendicular. Show Answer Correct Answer: A) Concave. 12. In a real assets investment simulation, how does diversification typically occur? A) Focusing exclusively on one type of real asset. B) Ignoring the need for diversification. C) Acquiring a mix of tangible assets across different sectors. D) Investing in a variety of financial instruments. Show Answer Correct Answer: C) Acquiring a mix of tangible assets across different sectors. 13. The subject "Investment project management, includes: A) 04 chapters. B) 05 chapters. C) 06 chapters. D) 07 chapters. Show Answer Correct Answer: C) 06 chapters. 14. An investor invests 30 percent of his wealth in a risky asset with an expected rate of return of 0.15 and a variance of 0.04 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; 0.12. B) 0.087;0.06. C) 0.295; 0.12. D) 0.087; 0.12. Show Answer Correct Answer: B) 0.087;0.06. 15. This is a package of government instruments, usually composed of Treasury bills, notes, and bonds, that is assembled by a fund management company. A) U.S Treasury Issuance. B) Commercial Paper. C) Repurchase Agreement. D) Money Market Fund. Show Answer Correct Answer: D) Money Market Fund. 16. In ethical investing, how might stakeholders view the trade-off between risk and return? A) Avoiding any investments with potential financial risks. B) Balancing the pursuit of returns with ethical and social considerations. C) Ignoring financial risks to prioritize ethical goals. D) Favoring high-risk, high-return investments regardless of ethical considerations. Show Answer Correct Answer: B) Balancing the pursuit of returns with ethical and social considerations. 17. When any of the preceding investments are initially issued to an investors or dealers, this is considered a secondary market transaction. A) TRUE. B) FALSE. Show Answer Correct Answer: B) FALSE. 18. The tendency to assign a higher value to an asset simply because one owns it is known as: A) Confirmation bias. B) Endowment effect. C) Hindsight bias. D) Loss aversion. Show Answer Correct Answer: B) Endowment effect. 19. What is the name of a stock market index that represents the performance of 500 large companies listed on stock exchanges in the United States? A) NASDAQ Composite Index. B) Dow Jones Industrial Average. C) Nikkei 225. D) S & P 500. Show Answer Correct Answer: D) S & P 500. 20. Company XYZ is an advisory firm that assesses two investment options. Aggressive and Conservative. The Aggressive option has an Expected Return of 13% and a standard deviation of 20%. The Conservative option has an Expected Return of 8% and a standard deviation of 12%. The covariance between the Aggressive and Conservative options is 0.0072. If the Aggressive and Conservative options were the available options (there are no other risk-free assets). How should investors choose? A) Everyone has the Aggressive option because it is less risky. B) Nobody chose the Aggressive option. C) Nobody voted for the Conservative option. D) Not enough information to draw a conclusion. Show Answer Correct Answer: C) Nobody voted for the Conservative option. ← PreviousNext →Related QuizzesInvestments QuizzesInvestment Management Quiz 1Investment Management Quiz 2Investment Management Quiz 3Investment Management Quiz 4Investment Management Quiz 5Investment Management Quiz 7Investment Management Quiz 8Investment Management Quiz 9Investment Management Quiz 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books