FREE CIFC Investment Strategies and Portfolio Management Questions and Answers
What is the primary goal of portfolio diversification?
Diversification reduces risk by spreading investments across various asset classes, sectors, or regions to minimize the impact of poor performance in any one area.
What is the key characteristic of a growth investment strategy?
Growth strategies focus on investing in companies or sectors with high potential for capital appreciation, typically with higher risk.
What is asset allocation in portfolio management?
Asset allocation is the process of dividing an investment portfolio among different asset classes to balance risk and reward.
Which investment strategy involves holding assets for a long period to achieve steady growth?
The buy-and-hold strategy involves keeping investments for a long duration to benefit from steady growth and compounding returns.
What is the primary focus of a value investing strategy?
Value investing focuses on identifying undervalued stocks that are expected to increase in value over time, offering a margin of safety.
What is rebalancing in portfolio management?
Rebalancing involves adjusting the portfolio's asset allocation back to the target mix to maintain the desired risk level.