Choose wisely. There is only one correct answer to each question.
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1.
Which statement is false?
It's easy to build a well-diversified, high-quality portfolio made up only of SRI. Building an all-SRI portfolio can be difficult. There just is not an abundance of good choices in some areas of the market, especially bonds and international stocks.
2.
The average socially responsible investing fund's costs are _______.
More than the average non-SRI fund's. These funds are often smaller than non-SRI funds and therefore don't enjoy the same economies of scale. Further, some SRI funds charge higher management fees, taking into account the added costs of SRI screening and research.
3.
Which of the following investments would a socially responsible investing fund most likely accept in its portfolio?
A grape grower. Of the four choices, this one is the least objectionable. (Where the grapes end up is, of course, another matter.)
4.
Socially responsible funds _______.
May screen companies on different values; there's no one SRI approach. Although most SRI funds shun tobacco, alcohol, and nuclear-weapons manufacturers, they can screen on dozens of different criteria. There's no single approach.
5.
A socially responsible investing fund might engage in shareholder activism within companies it owns because _______.
It wants to change policies it disagrees with. A perfectly ethical company is a rarity; thus, a SRI fund might use activism to mold its companies to its wishes.
