Advanced Financial Literacy Unit #4 Test Review Activity

A collection of investment assets owned by an individual or entity.

• Portfolio

• Asset allocation

• Derivative

• Currency

___________________ is how investors split up their portfolios among different kinds of asset classes.

• Diversification

• Asset allocation

• Buy-and-hold

• Dollar-cost averaging

A strategy that mixes a wide variety of investments within a portfolio to reduce firm-specific risk.

• Buy-and-hold

     

• Dollar-cost averaging

•   Asset allocation

• Diversification

Investing the same amount of money in an investment asset at regular intervals over a certain period..

• Buy-and-hold

     

• Dollar-cost averaging

•   Asset allocation

• Diversification

The type of risk that cannot be eliminated by diversification is ________________.

• individual company

• market

• firm-specific

• unsystematic.

Which response below would LEAST identify with buy-and-hold strategy?

• Strongly considers peaks and valleys when considering investment choices.

• Passive investing that does not try to time the market.

•   Buying assets and not selling them for extended periods.

• Favored strategy of investment guru Warren Buffett.

ALL the responses below are true regarding index funds EXCEPT

•   

  Replicates the exact asset allocation and diversification of the model investment portfolio

• Regularly outperform many professional fund managers.

• Professional managed.

• Low expense fees.

Unlike index or mutual funds, exchange-traded funds _____________________.

• provide investors a portfolio replication of diversified assets. 

• help investors meet specific investment goals.

• are priced and exchanged during trading hours.

• can track different asset classes like, stocks, bonds, and commodities.

Check ALL that apply regarding mutual funds?

• Actively managed.

     

• Are privately traded.

• Higher expense fees and commissions than index funds.

• Known by the asset classes they invest in, their investment objectives, and the type of returns they seek.

An aggressive investor with a 30-year time horizon would MOST likely invest in which fund below?

• Small-Cap Growth Mutual Fund

• Municipal Bond ETF

• U.S. Treasury Bond Index Fund

• Balanced Mutual Fund