Investment Jobs Fundamentals 2

Question 1

What does the term 'buy-side' typically refer to in the investment industry?

Accepted Answer

Firms that manage money and purchase securities, like asset managers and hedge funds

Answer

The buy-side consists of institutions like asset managers, pension funds, and hedge funds that invest capital by buying securities.

Question 2

Which entry-level role is most associated with building financial models and pitch books at an investment bank?

Accepted Answer

Analyst

Answer

Investment banking analysts are the junior staff who build models and prepare pitch books.

Question 3

What is the primary purpose of diversification in a portfolio?

Accepted Answer

To reduce unsystematic risk by spreading investments

Answer

Diversification lowers company-specific (unsystematic) risk by holding a mix of uncorrelated assets.

Question 4

Which regulatory body oversees securities markets in the United States?

Accepted Answer

The SEC

Answer

The Securities and Exchange Commission (SEC) regulates U.S. securities markets and protects investors.

Question 5

What does 'liquidity' describe about an asset?

Accepted Answer

How quickly it can be converted to cash without major price loss

Answer

Liquidity measures how easily an asset can be sold for cash near its market value.

Investment Practice Test