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.
If a mutual fund no longer meets one of your investment criteria, should you sell it?
Maybe, maybe not. It becomes a more important issue once it no longer meets most of your criteria.
3.
What can happen if you ignore changes that occur in your portfolio?
Both of the above. Ignore changes in your portfolio and you may end up with a portfolio that's very different from the one you originally put together.
4.
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.
5.
When monitoring your investment portfolio, you would be wise to _______.
Develop a set of monitoring procedures. Approach your portfolio scientifically with a set of procedures, goals, and criteria.
