Investment Jobs Fundamentals 4

Question 1

What is the main function of a portfolio manager?

Accepted Answer

Making investment decisions to meet a fund's objectives

Answer

A portfolio manager decides which assets to buy and sell to achieve a fund's investment goals.

Question 2

What does 'diversifiable risk' also commonly get called?

Accepted Answer

Unsystematic risk

Answer

Diversifiable risk is unsystematic risk that can be reduced by holding a varied portfolio.

Question 3

Which statement best describes a hedge fund?

Accepted Answer

A pooled fund using varied strategies, often for accredited investors

Answer

Hedge funds pool capital and use diverse, often aggressive strategies, typically limited to accredited investors.

Question 4

What is the role of a research analyst on the sell-side?

Accepted Answer

Producing reports and recommendations on stocks for clients

Answer

Sell-side research analysts publish analysis and buy/sell/hold recommendations for clients.

Question 5

What does the P/E ratio measure?

Accepted Answer

A stock's price relative to its earnings per share

Answer

The price-to-earnings (P/E) ratio compares a stock's price to its earnings per share.

Investment Practice Test