Investment MCQ 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 Investment MCQ flashcards as text
What does 'time horizon' mean in investing?
Answer: The length of time until funds are needed
Time horizon is the expected length of time before an investor needs to access the invested money.
Which best describes a bear market?
Answer: A prolonged decline in prices
A bear market is a prolonged period of declining prices, typically 20% or more from recent highs.
Rebalancing a portfolio means:
Answer: Restoring target asset allocation
Rebalancing adjusts holdings back to the intended target allocation after market movements shift weights.
An expense ratio represents:
Answer: A fund's annual operating cost as a percentage
The expense ratio is the annual fee a fund charges expressed as a percentage of assets.
Which factor most directly affects a callable bond?
Answer: Issuer can redeem it early
A callable bond allows the issuer to redeem it before maturity, usually when interest rates fall.
Diversifying internationally primarily helps to:
Answer: Reduce exposure to a single country's risks
International diversification reduces reliance on any single country's economic and market conditions.
What is the risk-return tradeoff?
Answer: Higher risk generally requires potential for higher return
The risk-return tradeoff states that investors must accept higher risk to pursue higher potential returns.