Basics Beginner: Creating a Portfolio

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
The amount of money you have to invest does not play a role in your choice of investments.
Choose wisely. There is only one correct answer.
False. It plays a role because it alters your investment options and risk tolerance.
2.
The closer the beta of an investment is to 1, _______.
Choose wisely. There is only one correct answer.
The closer its volatility is to that of the whole market. "1" is the base value of beta.
3.
Why is your age important when you create an investment portfolio?
Choose wisely. There is only one correct answer.
All of the above. All of these make your age a factor for successful investing.
4.
When a financial advisor says, "Let's talk about risk and how much you can deal with," he or she is talking about _______.
Choose wisely. There is only one correct answer.
Risk tolerance. Risk tolerance is the amount of risk with which you are comfortable.
5.
There are mutual funds that change the amounts of their holdings to keep up with market changes.
Choose wisely. There is only one correct answer.
True. These funds are called asset allocation funds. They use formulas to change their allocations.
6.
Financial advisors suggest diversifying because putting your money into different investments is often the best way to avoid losing large sums of money.
Choose wisely. There is only one correct answer.
True. Diversifying spreads risk among several investments.