Fundamentals Flashcards
7 cards from real Investment practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Fundamentals flashcards as text
What is the main function of a portfolio manager?
Answer: Making investment decisions to meet a fund's objectives
A portfolio manager decides which assets to buy and sell to achieve a fund's investment goals.
What does 'diversifiable risk' also commonly get called?
Answer: Unsystematic risk
Diversifiable risk is unsystematic risk that can be reduced by holding a varied portfolio.
Which statement best describes a hedge fund?
Answer: A pooled fund using varied strategies, often for accredited investors
Hedge funds pool capital and use diverse, often aggressive strategies, typically limited to accredited investors.
What is the role of a research analyst on the sell-side?
Answer: Producing reports and recommendations on stocks for clients
Sell-side research analysts publish analysis and buy/sell/hold recommendations for clients.
What does the P/E ratio measure?
Answer: A stock's price relative to its earnings per share
The price-to-earnings (P/E) ratio compares a stock's price to its earnings per share.
What is 'due diligence' in an investment context?
Answer: Thorough investigation of an investment before committing capital
Due diligence is the careful research and verification conducted before making an investment.
Which license is commonly required for selling securities in the U.S.?
Answer: Series 7
The Series 7 license qualifies a person to sell a broad range of securities products.