Finance Unbox-ED ($) - Grade 6-8 - Session 042 - Assessment 11

Select all the statements that are true

• Diversification means that instead of making only one investment you make multiple investments
• Diversification helps increase volatility since there are multiple asset classes
• Diversification is important as it reduces risk
• All of the above

Correlation is the relationship in the returns of different investments and is important to understand the benefits of diversification

• True
• False

Select all the statements that are true

• Negative correlation means that if the price of one investment goes up the price of the other investment goes down and vice versa
• Positive correlation means that the price of both investments go up and down together
• No or low correlation means that the prices of both investments move independent of each other
• All of the above

Select all the statements that are true

• Negative correlation increases risk as it increases volatility
• No or low correlation means there will no increase or decrease in volatility
• Positive correlation decreases risk as it decreases volatility
• None of the above

Select all the statements that are true

• Equity and gold returns have negative correlation
• Equity and fixed deposit returns have no or low correlation
• Gold and fixed deposit returns have positive correlation
• All of the above

Select all the statements that are true

• Stock exchange is a place where people can buy and sell shares of companies
• Buying and selling of shares on the stock exchange is also called trading in shares
• Small portion of the trades now happen over the internet i.e. electronic trades
• Shares we purchase are stored in an electronic form in something called a demat account

Select all the statements that are true

• Companies need to do a lot of paperwork and compliances and get listed on an exchange
• Once companies are listed on the stock exchange they are called listed companies
• People can buy and sell shares of only listed companies on the stock exchange
• All of the above

Market capitalization means the valuation of the company and is calculated as follows - Share Price x Number of Shares Owned by the Founders

• True
• False

Select all the statements that are true

• Share price is nothing but the price of one share of a company
• Share prices go up or down basis how much demand there is for the shares of the company
• Demand for a company's shares is higher if the company is expected to do well
• All of the above

Select the statement that is true

• IPO stands for Initial Public Offering
• IPO is the first time a company offers its shares to the public to purchase
• Both of the above
• None of the above