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Investment Strategy Test 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 Strategy Test flashcards as text

  1. An investor with a 30-year horizon and high risk tolerance should generally weight toward:

    Answer: Equities for long-term growth

    Long horizons and high risk tolerance favor equities, which offer greater growth potential over time.

  2. What is the main risk of a concentrated portfolio?

    Answer: Outsized losses if one holding underperforms

    Concentration ties results to a few holdings, magnifying losses if they decline.

  3. A growth investing strategy emphasizes companies with:

    Answer: Above-average earnings growth potential

    Growth investing targets firms expected to grow earnings faster than the market.

  4. Asset allocation refers to:

    Answer: Dividing investments among asset classes like stocks, bonds, and cash

    Asset allocation is the mix of asset classes chosen to balance risk and return.

  5. Which metric measures a stock's volatility relative to the overall market?

    Answer: Beta

    Beta gauges how much a security moves relative to the broader market.

  6. A laddered bond strategy is designed to:

    Answer: Stagger maturities to manage interest rate and reinvestment risk

    Bond laddering spreads maturities to reduce reinvestment and rate timing risk.

  7. Tax-loss harvesting is used to:

    Answer: Offset capital gains by realizing losses

    Selling losing positions can offset realized gains and reduce tax liability.