RIA Investment Strategies 2

Question 1

An alternative investment's primary benefit in a portfolio is typically:

Accepted Answer

Low or negative correlation with traditional assets, improving diversification

Answer

Alternative investments (hedge funds, private equity, real assets) often have low correlation with stocks and bonds, enhancing portfolio diversification.

Question 2

A momentum investing strategy:

Accepted Answer

Buys securities showing recent strong performance expecting it to continue

Answer

Momentum investing buys recently outperforming securities, betting that the trend will continue for some period.

Question 3

A barbell bond strategy involves:

Accepted Answer

Concentrating holdings in short and long maturities while avoiding intermediate

Answer

A barbell strategy concentrates bond investments at short and long maturities, avoiding the middle, to balance income (long bonds) and flexibility (short bonds).

Question 4

ESG investing incorporates which factors into investment decisions?

Accepted Answer

Environmental, Social, and Governance criteria

Answer

ESG investing considers Environmental (climate, pollution), Social (labor practices, diversity), and Governance (board structure, transparency) factors alongside financial metrics.

Question 5

Options trading that uses a 'protective put' strategy involves:

Accepted Answer

Buying puts on existing stock positions to limit downside risk

Answer

A protective put buys put options on existing stock holdings, providing downside insurance while maintaining upside potential.

(RIA) Registered Investment Advisor Practice Test

(RIA) Registered Investment Advisor Practice Test

RIA Investment Strategies 2