Personal Finance / Investment Review

What is a risk management technique that mixes a wide variety of investments within an investment portfolio?

• Commodities

• Investment

• Diversification

• Stock acquisition

When forming a balanced investment portfolio, a person should consider their ratio of _________ within the portfolio.

• bond funds to single stocks

• commodities to fixed-income investments

• equities to fixed-income investments

• single stocks to mutual funds

Choose the type of investment that carries a lower amount of risk.

• Certificate of Deposit

• Mutual Funds

Choose the type of investment that carries a lower amount of risk.

• Small Cap Stock

• S&P 500 Index ETF

Choose the type of investment that carries a lower amount of risk.

• Mutual Funds

• U.S. Government Treasury Bills

People who are younger tend to favor a portfolio that has a ____________ degree of risk as compared to the portfolio of someone who is older.

• higher

• same

• lower

Index tracking ETF’s (DIA/DOW30, SPX/S&P500, NDX/NASDAQ) tend to have average (past 25 yr.) annual returns in the ___________ range.

• 24-32%

• 1-3%

• 8-12%

• 14-22%

What is one of the benefits of fixed income securities as opposed to equities?

• They offer a fixed rate of return over a specific period of time

• They offer much higher rates of return with virtually no risk

• They increase the risk level in relation to equity investments

• They allow an investor to access their investment at any time without penalty

A stock of a large, well-established, and financially sound company that has operated for many years is known as a ______________.

• blue-chip stock

• index fund

• junk bond

• small-cap stock

Which of these portfolios represents an AGRESSIVE portfolio?

• A

• B

• C