I - Multiple Choice:

1. What is portfolio management?

a) Speculating on individual stocks
b) Overseeing a group of investments to meet financial objectives
c) Buying and selling securities randomly
d) Investing solely in index funds

2. What does asset allocation involve?

a) Spreading investments across different asset classes
b) Concentrating all investments in one asset class
c) Ignoring risk tolerance
d) Randomly selecting investments

3. Which of the following is a key takeaway of portfolio management?

a) It involves randomly selecting investments
b) It only benefits institutional investors
c) It requires no long-term goals
d) It aims to meet financial goals and risk tolerance

4. Active portfolio management seeks to:

a) Mimic the market
b) Beat the performance of the broader market
c) Have lower returns than passive management
d) Avoid any risk

5. How do portfolio managers minimize risks?

a) By putting all investments in high-risk assets
b) By avoiding diversification
c) By concentrating investments in one sector
d) By diversifying the investment mix
6. What is the primary goal of a portfolio manager?
a) To maximize risk exposure
b) To minimize returns
c) To maximize returns within an appropriate level of risk exposure
d) To ignore clients' financial goals

7. Which term refers to adjusting the investment strategy based on market fluctuations?
a) Asset allocation
b) Rebalancing
c) Portfolio efficiency
d) Passive management

8. What is the importance of portfolio adjustment?

a) To reduce taxes
b) To maximize returns
c) To eliminate all risks
d) To avoid diversification

9. What role does a portfolio manager play in investment decisions?

a) They randomly select investments
b) They help design and implement investment plans
c) They avoid monitoring assets
d) They solely focus on short-term goals

10. Which factor is crucial in asset allocation?

a) Ignoring risk tolerance
b) Budget constraints
c) Avoiding financial goals
d) Age of the investor
II - True or False:
1. Passive portfolio management involves trying to beat the performance of the market.
2. Asset diversification helps minimize the impact of a single investment's poor
performance on the entire portfolio.
3. Rebalancing is not necessary for a well-managed portfolio.
4. Tax considerations are irrelevant in portfolio management.
5. Active management involves a set-it-and-forget-it strategy.

III - Matching:

Match the following terms with their descriptions:

a. Discretionary management Decentralized market for trading securities

directly

b. Over-the-counter markets Strategy to replicate the return of a market

index

c. Passive portfolio management Management style where the broker makes

decisions without investor approval

d. Index fund management Contract whose value is based on an

underlying financial asset

e. Derivatives markets
Strategy involving attempting to outperform
a specific index
IV - Fill in the Blank:

1. Financial markets are vital for _________ economic growth and stability.
2. The equities market enables investors to buy and sell shares of _________
companies.
3. Bonds are issued by corporations as well as by municipalities, states, and sovereign
governments to finance projects and _________.
4. Money markets trade in products with highly liquid _________ maturities.
5. The forex market is where participants can buy, sell, hedge, and speculate on the
exchange rates between currency _________.