ABC Investment Strategies 3

Question 1

A public relations team is drafting a press release about their company's ESG investment fund launch. ESG stands for:

Accepted Answer

Environmental, Social, and Governance

Answer

ESG investing evaluates companies on Environmental, Social, and Governance criteria alongside financial metrics.

Question 2

Which investment vehicle pools money from many investors to purchase a diversified portfolio of stocks or bonds, managed by a professional?

Accepted Answer

Mutual fund

Answer

Mutual funds aggregate capital from multiple investors and are managed by professional portfolio managers to achieve stated objectives.

Question 3

When explaining liquidity risk in a stakeholder report, a communicator should convey that it refers to:

Accepted Answer

The risk of not being able to sell an asset quickly at fair value

Answer

Liquidity risk is the danger of being unable to convert an investment to cash quickly without a significant price concession.

Question 4

A financial communicator explaining a 'rebalancing' strategy to employees should describe it as:

Accepted Answer

Restoring a portfolio to its target asset allocation after market shifts

Answer

Rebalancing realigns a portfolio's asset mix to its original target weights after market fluctuations cause drift.

Question 5

Which of the following best describes a passive investment strategy?

Accepted Answer

Tracking a market index with minimal trading activity

Answer

Passive investing seeks to replicate index performance rather than beat the market, typically resulting in lower fees and turnover.

(ABC) Accredited Business Communicator Practice Test