CPS Investment Strategies and Asset Allocation

Question 1

What is a 'growth investing' strategy focused on?

Accepted Answer

Companies expected to grow earnings faster than average

Answer

Growth investing targets companies expected to increase earnings significantly above the market average, often at higher valuations.

Question 2

What characterizes a 'value investing' approach?

Accepted Answer

Buying securities believed to be undervalued relative to intrinsic worth

Answer

Value investing involves identifying and buying securities trading below their estimated intrinsic value, seeking a margin of safety.

Question 3

What is an 'income-oriented' investment strategy primarily focused on?

Accepted Answer

Generating regular income through dividends and interest payments

Answer

Income-oriented strategies prioritize generating regular cash flow through dividends, bond interest, and other yield-producing investments.

Question 4

What is 'factor investing' (smart beta) based on?

Accepted Answer

Targeting specific return-driving characteristics like value, size, or momentum

Answer

Factor investing targets specific characteristics (factors) such as value, size, momentum, or quality that have historically delivered excess returns.

Question 5

What is 'sector rotation' as an investment strategy?

Accepted Answer

Shifting investments between sectors based on economic cycle stages

Answer

Sector rotation involves moving investments between economic sectors to capitalize on different sectors that outperform at different points in the business cycle.

CPS - Certified Portfolio Specialist Practice Test

CPS - Certified Portfolio Specialist Practice Test

CPS Investment Strategies and Asset Allocation