Investment Jobs Investment Strategy Test 2

Question 1

A client nearing retirement wants to reduce portfolio volatility. Which asset allocation shift best fits this goal?

Accepted Answer

Shift more into investment-grade bonds and cash

Answer

Increase allocation to small-cap growth stocks

Answer

Concentrate holdings in a single high-dividend sector

Answer

Add leveraged equity ETFs

Question 2

What is the primary purpose of rebalancing a portfolio?

Accepted Answer

To restore the target asset allocation after market drift

Answer

To maximize trading commissions

Answer

To eliminate all investment risk

Answer

To time market tops and bottoms

Question 3

Dollar-cost averaging primarily helps an investor by:

Accepted Answer

Reducing the impact of market timing through regular fixed investments

Answer

Guaranteeing a profit

Answer

Eliminating fees entirely

Answer

Increasing leverage automatically

Question 4

Which strategy seeks to outperform a benchmark index through security selection?

Accepted Answer

Active management

Answer

Passive indexing

Answer

Buy-and-hold of an index fund

Answer

Pure cash holding

Question 5

A diversified portfolio reduces which type of risk most effectively?

Accepted Answer

Unsystematic (company-specific) risk

Answer

Systematic (market) risk

Answer

Interest rate risk on all bonds

Answer

Inflation risk entirely

Question 6

What does a higher Sharpe ratio indicate about an investment?

Accepted Answer

Better risk-adjusted return

Answer

Higher fees

Answer

Greater leverage used

Answer

Lower liquidity

Question 7

A value investing strategy typically targets:

Accepted Answer

Stocks trading below their intrinsic value

Answer

Only the fastest-growing tech firms

Answer

Securities with the highest momentum

Answer

Companies with no earnings history