Choose wisely. There is only one correct answer to each question.
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1.
The best way to put an investment's performance into context is to compare its returns to those of other investments in your portfolio.
False. The best way to do it is to compare its returns to an appropriate benchmark.
2.
The best way to put an investment's performance into context is to compare its returns to those of _______.
An appropriate benchmark. Compare the returns of your investments to the benchmark you chose.
3.
What should you expect from your mutual funds as you're monitoring them?
That they're still meeting your investment criteria. You want your funds to meet the same investment criteria today as they did when you first bought them. If they no longer meet your criteria, do they still belong in your portfolio?
4.
Which of the following would be valuable to do before you start monitoring your investment portfolio?
Both of the above. Both of these are wise things to do. Though you can develop your monitoring procedures on your own, creating an investment policy statement would accomplish that as well as additional objectives.
5.
What is the danger in letting the strongest performers of your portfolio stay in there and continue performing, as opposed to regular rebalancing?
It increases the overall risk level, which can magnify losses during a downturn. And that means you might not meet the goals for which you are investing in the first place.
