#1
Which of the following is a fundamental principle of finance?
Risk aversion
ExplanationPreference for lower-risk investments.
#2
What does the term 'ROI' stand for in investment?
Return on Investment
ExplanationMeasurement of profitability.
#3
What does the term 'PE ratio' represent in finance?
Price-to-Earnings ratio
ExplanationRelative valuation of a company's shares.
#4
Which of the following is NOT a type of investment risk?
Profit risk
ExplanationRisk related to profitability.
#5
What does the term 'dividend yield' indicate in finance?
The percentage of dividends paid relative to the stock price
ExplanationYield on investment from dividends.
#6
Which investment strategy aims to minimize risk by spreading investments across different assets?
Diversification
ExplanationSpreading risk across various assets.
#7
What is the formula to calculate compound interest?
P × (1 + r)^t
ExplanationCalculation of interest on interest.
#8
What is the primary goal of asset allocation?
Minimizing risk
ExplanationReducing overall portfolio risk.
#9
In the context of investment, what does the term 'liquidity' refer to?
Ease of converting assets into cash
ExplanationAbility to convert assets into cash quickly.
#10
What is the primary objective of fundamental analysis in investing?
Analyzing company financials and economic factors
ExplanationEvaluation of company performance.
#11
Which financial theory suggests that an investor cannot consistently achieve returns in excess of average market returns?
Efficient market hypothesis
ExplanationMarket efficiency in pricing.
#12
Which investment strategy involves buying and holding securities for the long term, regardless of market fluctuations?
Value investing
ExplanationFocus on undervalued assets for long-term growth.
#13
What does the term 'alpha' represent in portfolio management?
The excess return of an investment over its benchmark
ExplanationExcess return compared to market.
#14
What is the primary focus of technical analysis in investing?
Historical price and volume data
ExplanationAnalysis of past market data.
#15
What does the term 'margin call' refer to in investing?
A request for additional funds to cover losses
ExplanationDemand for more capital due to losses.