Investment Cheat Sheet 2026

The 30 highest-yield Investment facts, distilled from real exam questions. Print it, save it as a PDF, or study it here — free, no sign-up.

1. Which portfolio performance metric measures return per unit of total risk (standard deviation)? → Sharpe ratio
2. What is the standard fee structure for most hedge funds (the '2 and 20' model)? → 2% management fee and 20% performance fee on profits
3. Which investment is generally considered the safest in the US? → US Treasury securities
4. What is a 'callable bond' and what risk does it present to investors? → A bond the issuer can redeem before maturity; presents reinvestment risk
5. A 'bull market' is characterized by: → Rising prices and investor optimism
6. Strategic asset allocation differs from tactical allocation in that it: → Sets long-term target weights held over time
7. What is the purpose of a stock split? → To reduce the share price by increasing the number of shares outstanding
8. What is the role of a research analyst on the sell-side? → Producing reports and recommendations on stocks for clients
9. What does a dividend represent? → A distribution of company profits to shareholders
10. What is the real interest rate if the nominal interest rate is 4.00% and the inflation rate is 2.25%? → 1.75%
11. What is the 2025 annual contribution limit for an individual IRA (Traditional or Roth) for those under age 50? → $7,000
12. What does a negative alpha indicate about a portfolio manager's performance? → The portfolio underperformed its benchmark on a risk-adjusted basis
13. Market capitalization is calculated as: → Share price times shares outstanding
14. What is 'short selling' in equity markets? → Selling borrowed shares hoping to repurchase at a lower price
15. Which term describes the strategy of investing in undervalued stocks trading below their intrinsic worth? → Value investing
16. In general, bond prices will _____ if interest rates decrease. → Increase
17. What is dividend yield? → Annual dividend divided by share price
18. A growth investing strategy emphasizes companies with: → Above-average earnings growth potential
19. What is the primary risk that causes high-yield ('junk') bonds to offer higher interest rates than investment-grade bonds? → Credit (default) risk
20. Which document reports a mutual fund's holdings and performance periodically? → The annual or semi-annual report
21. What happens to a bond's price when interest rates rise? → The price falls
22. A front-end load is a fee charged when? → At the time shares are purchased
23. Compound interest is best described as earning interest on: → Both principal and accumulated interest
24. What does 'market capitalization' represent? → Total value of a company's outstanding shares
25. Asset allocation primarily refers to: → Dividing investments among asset categories
26. Which license is commonly required for selling securities in the U.S.? → Series 7
27. A bond's coupon rate is 5% and its current market price is below par. What is true about its current yield? → Current yield is greater than 5%
28. An employer 401(k) match is best described as: → Free money added to your contributions
29. An open-end mutual fund issues shares in what manner? → Continuously, creating new shares as investors buy in
30. A zero-coupon bond is sold at $600 and matures at $1,000 in 5 years. How does the investor earn a return? → Through the difference between purchase price and maturity value