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 efficient frontier shows optimal portfolios maximizing return per unit of risk.

Question 2

A contrarian investment strategy involves:

Accepted Answer

Buying assets that are out of favor with the market

Answer

Contrarians go against prevailing sentiment, buying unpopular or oversold assets.

Question 3

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

Accepted Answer

A passive index core surrounded by smaller active positions

Answer

Core-satellite pairs a low-cost passive base with targeted active holdings.

Question 4

Correlation between two assets matters in portfolio construction because:

Accepted Answer

Lower correlation improves diversification benefits

Answer

Combining assets that move differently lowers overall portfolio volatility.

Question 5

A momentum strategy is based on the idea that:

Accepted Answer

Recent winners tend to keep outperforming in the near term

Answer

Momentum investing assumes trends persist, favoring recent outperformers.

Investment Practice Test