RIA Investment Strategies

Question 1

A passive investment strategy seeks to:

Accepted Answer

Replicate market index returns with minimal trading and costs

Answer

Beat the market through active security selection

Answer

Use leverage to amplify returns

Answer

Invest only in defensive sectors

Question 2

The value investing approach, associated with Benjamin Graham, focuses on:

Accepted Answer

Buying securities trading below their intrinsic value

Answer

Momentum-based trading

Answer

Growth at any price

Answer

Technical chart analysis

Question 3

In a rising interest rate environment, which bond strategy would best protect a portfolio?

Accepted Answer

Reducing duration (shortening maturities)

Answer

Extending duration

Answer

Increasing allocation to long-term bonds

Answer

Concentrating in fixed-rate bonds

Question 4

Dollar-cost averaging (DCA) is most beneficial when:

Accepted Answer

Investors are uncertain about market timing and invest regularly over time

Answer

Markets are steadily rising

Answer

Investors have a one-time lump sum to invest at market lows

Answer

Interest rates are stable

Question 5

A covered call options strategy involves:

Accepted Answer

Selling call options against existing stock holdings to generate income

Answer

Buying call options to speculate on stock price increases

Answer

Buying puts for downside protection

Answer

Shorting the underlying stock while selling puts

Question 6

Sector rotation strategy attempts to:

Accepted Answer

Invest in sectors expected to outperform at different stages of the economic cycle

Answer

Eliminate all sector exposure

Answer

Always hold equal weights in all sectors

Answer

Invest only in defensive sectors