RFC Investment Strategies & Portfolio Management

Question 1

What is diversification in portfolio management?

Accepted Answer

Spreading investments to reduce risk

Answer

Focusing on one asset class

Answer

Investing in high-risk stocks only

Answer

Timing the market frequently

Question 2

Which strategy is typically used for long-term investment growth?

Accepted Answer

Buy and hold

Answer

Day trading

Answer

Market speculation

Answer

Short selling

Question 3

What is the primary goal of asset allocation?

Accepted Answer

Balance risk and return

Answer

Maximize short-term gains

Answer

Avoid taxes entirely

Answer

Focus only on stocks

Question 4

What does a high beta value indicate about a stock?

Accepted Answer

It is more volatile than the market

Answer

It has low liquidity

Answer

It is less risky than the market

Answer

It moves in line with inflation

Question 5

Which of the following is considered a defensive investment?

Accepted Answer

Utilities

Answer

Technology stocks

Answer

Commodities

Answer

Real estate development

Question 6

What does rebalancing a portfolio involve?

Accepted Answer

Adjusting asset allocations

Answer

Withdrawing all funds

Answer

Selling only profitable assets

Answer

Shifting to foreign markets only