Choose wisely. There is only one correct answer to each question.
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1.
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.
2.
All socially responsible investing funds use shareholder activism.
False. Some SRI funds use shareholder activism to reform companies, but others just avoid them entirely.
3.
A socially responsible investing fund _______.
Might own an oil company. Although generally considered to be unfriendly to the environment, an oil company could be held in an environmentally concerned SRI fund if that fund takes a relative approach. That's why it's important to understand how a fund's screens work.
4.
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.
5.
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.)
