Investment Investment MCQ 5

Question 1

What does 'time horizon' mean in investing?

Accepted Answer

The length of time until funds are needed

Answer

Time horizon is the expected length of time before an investor needs to access the invested money.

Question 2

Which best describes a bear market?

Accepted Answer

A prolonged decline in prices

Answer

A bear market is a prolonged period of declining prices, typically 20% or more from recent highs.

Question 3

Rebalancing a portfolio means:

Accepted Answer

Restoring target asset allocation

Answer

Rebalancing adjusts holdings back to the intended target allocation after market movements shift weights.

Question 4

An expense ratio represents:

Accepted Answer

A fund's annual operating cost as a percentage

Answer

The expense ratio is the annual fee a fund charges expressed as a percentage of assets.

Question 5

Which factor most directly affects a callable bond?

Accepted Answer

Issuer can redeem it early

Answer

A callable bond allows the issuer to redeem it before maturity, usually when interest rates fall.

Investment Practice Test