#1
Which of the following is NOT a factor typically considered in investment decision-making?
Market trends
ExplanationMarket trends are indeed considered in investment decision-making.
#2
What does the term 'ROI' stand for in investment analysis?
Return on Investment
ExplanationROI represents the return gained from an investment relative to its cost.
#3
Which of the following is NOT a type of risk typically associated with investments?
Inflation risk
ExplanationInflation risk is indeed a type of risk associated with investments.
#4
What is the primary goal of risk management in investment?
To balance risks and returns to achieve investment objectives
ExplanationThe primary goal of risk management is to balance risks and returns to meet investment goals.
#5
Which of the following is NOT a type of investment asset?
Insurance policies
ExplanationInsurance policies can indeed be considered as an investment asset.
#6
In the context of investments, what does 'Diversification' refer to?
Spreading investments across different assets
ExplanationDiversification aims to reduce risk by spreading investments across various assets.
#7
What is 'Beta' in finance and investment?
A measure of an asset's volatility relative to the market
ExplanationBeta indicates an asset's volatility concerning the overall market.
#8
What is the Sharpe Ratio used for in investment analysis?
To measure an investment's risk-adjusted return
ExplanationThe Sharpe Ratio quantifies an investment's return relative to its risk.
#9
Which of the following is a measure of systematic risk?
Beta
ExplanationBeta is indeed a measure of systematic risk.
#10
What does the term 'Liquidity' refer to in investment?
The ability to buy or sell an asset without causing a significant price change
ExplanationLiquidity pertains to the ease of buying or selling assets without impacting prices significantly.
#11
Which of the following statements best describes the concept of 'Time Value of Money'?
The principle that money available at the present time is worth more than the identical sum in the future due to its potential earning capacity
ExplanationThe Time Value of Money recognizes the greater worth of money today compared to the future due to its earning potential.
#12
Which of the following is a risk management technique that involves transferring the risk to another party?
Hedging
ExplanationHedging entails mitigating risk by transferring it to another party.
#13
What is 'CAPM' in the context of investment analysis?
Capital Asset Pricing Model
ExplanationCAPM is used to determine an asset's expected return based on its risk.
#14
What is 'Value at Risk (VaR)' in risk management?
A measure of the maximum potential loss in value of a risky asset over a specific time period
ExplanationVaR calculates the maximum potential loss of an asset over a specified period.
#15
Which of the following is a measure of non-systematic risk?
Alpha
ExplanationAlpha is indeed a measure of non-systematic risk.
#16
What is the primary purpose of the Modern Portfolio Theory (MPT) in investment?
To maximize returns while minimizing risks through diversification
ExplanationMPT aims to optimize returns by diversifying investments to manage risk.
#17
What does the term 'Risk-Adjusted Return' refer to in investment analysis?
The return of an investment adjusted for its risk level
ExplanationRisk-adjusted return accounts for an investment's return relative to its risk.