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100
ETFs 111:
Investing in Alternatives with Exchange-Traded Funds
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Choose wisely. There is only one correct answer to each question.
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1.
Leveraged inverse exchange-traded funds aim to provide _______.
Choose wisely. There is only one correct answer.
Several times an index's return
The equivalent of an index's return
The exact opposite return of a particular index
Several times an index's return. They aim for two or three times the index's return.
2.
Merger arbitrage involves buying stocks that are acquisition targets and _______.
Choose wisely. There is only one correct answer.
Shorting the stocks of the acquiring companies
Shorting a broad index of stocks
Shorting the stocks of the acquiring companies or a broad index of stocks
Shorting the stocks of the acquiring companies or a broad index of stocks. Merger arbitrage is a type of long-short strategy.
3.
Futures-based, long-commodity exchange-traded funds work best as what kind of strategy?
Choose wisely. There is only one correct answer.
Tactical
Valuation
Carry
Price momentum
Tactical. The other terms refer to currency-oriented ETF strategies.
4.
In order for an inverse exchange-traded fund to provide several times an index's return, it must use leveraging.
Choose wisely. There is only one correct answer.
True
False
True. Along with compounding, such a fund would use leverage to achieve its aim in a bear market.
5.
When investing in currencies via exchange-traded funds, a long position in one currency always means a _______ in another currency.
Choose wisely. There is only one correct answer.
Long position
Short position
Price momentum strategy
Short position. The two positions are used in tandem.
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