What is the primary objective of portfolio diversification?

a) Maximizing returns
b) Minimizing taxes
c) Minimizing risk
d) Maximizing liquidity
Which of the following is NOT a type of investment risk?
a) Market risk
b) Credit risk
c) Inflation risk
d) Capital risk
What is the Sharpe ratio used to measure in investment analysis?
a) Volatility-adjusted return
b) Total return
c) Risk-adjusted return
d) Liquidity-adjusted return
Which of the following investment strategies aims to profit from the price discrepancies in
related securities?
a) Growth investing
b) Value investing
c) Market timing
d) Arbitrage
What is the term for the practice of buying additional shares of an investment at lower prices to
reduce the average cost per share?
a) Dollar-cost averaging
b) Market timing
c) Asset allocation
d) Rebalancing
What is the primary function of an investment advisor?
a) Provide tax advice
b) Execute trades on behalf of clients
c) Provide investment recommendations and guidance
d) Provide legal advice
Which of the following is NOT typically considered an alternative investment?
a) Real estate
b) Hedge funds
c) Stocks
d) Private equity
What is the term for the process of periodically adjusting the weightings of assets in a portfolio?
a) Rebalancing
b) Asset allocation
c) Dollar-cost averaging
d) Hedging
What does the term "liquidity" refer to in investment management?
a) The ease of converting an asset into cash without affecting its price
b) The potential for an asset to increase in value over time
c) The risk associated with an investment
d) The total amount of assets held in a portfolio
Which of the following is NOT a factor typically considered in fundamental analysis of stocks?
a) Market trends
b) Earnings growth
c) Dividend yield
d) Management qualification
Which of the following is NOT a common investment objective?
a) Capital preservation
b) Wealth maximization
c) Risk minimization
d) Profit maximization
What does the term "alpha" represent in investment management?
a) The measure of a portfolio's excess return relative to the benchmark
b) The measure of a portfolio's total return
c) The risk-adjusted measure of a portfolio's return
d) The measure of a portfolio's relative volatility
Which of the following is NOT a characteristic of a mutual fund?
a) Diversification
b) Professional management
c) Limited liquidity
d) Pooling of investor funds
What is the primary purpose of asset allocation in investment management?
a) To maximize returns
b) To minimize taxes
c) To minimize risk
d) To achieve market timing
What does the term "beta" measure in investment management?
a) The measure of a security's systematic risk
b) The measure of a security's total risk
c) The measure of a security's unsystematic risk
d) The measure of a security's volatility