Investment Strategies Flashcards
6 cards from real RIA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Investment Strategies flashcards as text
An alternative investment's primary benefit in a portfolio is typically:
Answer: Low or negative correlation with traditional assets, improving diversification
Alternative investments (hedge funds, private equity, real assets) often have low correlation with stocks and bonds, enhancing portfolio diversification.
A momentum investing strategy:
Answer: Buys securities showing recent strong performance expecting it to continue
Momentum investing buys recently outperforming securities, betting that the trend will continue for some period.
A barbell bond strategy involves:
Answer: Concentrating holdings in short and long maturities while avoiding intermediate
A barbell strategy concentrates bond investments at short and long maturities, avoiding the middle, to balance income (long bonds) and flexibility (short bonds).
ESG investing incorporates which factors into investment decisions?
Answer: Environmental, Social, and Governance criteria
ESG investing considers Environmental (climate, pollution), Social (labor practices, diversity), and Governance (board structure, transparency) factors alongside financial metrics.
Options trading that uses a 'protective put' strategy involves:
Answer: Buying puts on existing stock positions to limit downside risk
A protective put buys put options on existing stock holdings, providing downside insurance while maintaining upside potential.
Core-satellite portfolio construction involves:
Answer: A passive core position supplemented by active satellite positions for potential alpha
Core-satellite combines a low-cost passive core (typically 60-80% of portfolio) with active satellite positions seeking additional returns.
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