Investment Management Quiz

What is the primary purpose of investment?

• To gamble on uncertain outcomes

• To provide entertainment

• To speculate on market trends

• To earn an income

Which of the following is NOT a characteristic of speculation?

• Uncertain expected return

• Careful analysis before investment

• Potential for large returns

• Higher level of risk

What type of risk is associated with factors that affect all securities?

• Market risk

• Unsystematic risk

• Business risk

• Systematic risk

Which of the following is a personal investment goal?

• Protection against inflation

• Portfolio diversification

• Providing a home

• Safety of principal

What is the time horizon typically associated with gambling?

• Long-term

• Short-term

• Medium-term

• Very short time period

Which of the following best describes systematic risk?

• Can be eliminated through diversification

• Due to common factors

• Easily manageable

• Affects only specific securities

What is the first step in the investment process?

• Managing the portfolio

• Selecting suitable investments

• Meeting investment pre-requisites

• Establishing investment goals

Which of the following is a financial objective of investment?

• Providing a home

• Insurance protection

• Education

• Liquidity portfolios

What is the relationship between risk and return?

• They are positively correlated

• They are independent of each other

• Higher risk guarantees higher return

• They are negatively correlated

Which type of investor is willing to accept high risk for potentially high returns?

• Risk neutral

• Risk taker

• Risk averse

• Conservative