Investment Jobs Investment Strategy Test 4

Question 1

The efficient frontier represents portfolios that offer:

Accepted Answer

The maximum expected return for a given level of risk

Answer

The highest fees for a given return

Answer

Zero risk and guaranteed returns

Answer

Only bond allocations

Question 2

A contrarian investment strategy involves:

Accepted Answer

Buying assets that are out of favor with the market

Answer

Following the crowd into popular trades

Answer

Only buying index funds

Answer

Avoiding any analysis

Question 3

Which best describes a 'core-satellite' portfolio approach?

Accepted Answer

A passive index core surrounded by smaller active positions

Answer

All active, high-cost funds

Answer

Only cash and gold

Answer

A single concentrated stock

Question 4

Correlation between two assets matters in portfolio construction because:

Accepted Answer

Lower correlation improves diversification benefits

Answer

Higher correlation always reduces risk

Answer

Correlation has no effect on risk

Answer

It only affects fees

Question 5

A momentum strategy is based on the idea that:

Accepted Answer

Recent winners tend to keep outperforming in the near term

Answer

Prices always revert immediately

Answer

Past performance is irrelevant

Answer

Only dividends drive returns

Question 6

Duration in a bond portfolio measures sensitivity to:

Accepted Answer

Changes in interest rates

Answer

Stock market crashes

Answer

Currency exchange rates only

Answer

Company earnings

Question 7

Strategic asset allocation differs from tactical allocation in that it:

Accepted Answer

Sets long-term target weights held over time

Answer

Makes frequent short-term shifts

Answer

Ignores risk tolerance

Answer

Uses only cash