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.
Investment portfolios can be called efficient when they ________.
Choose wisely. There is only one correct answer.
Contain the best possible mixes of assets for a specific risk level and return. Efficiency is relative to the kind of objective that you are trying to fulfill.
2.
Risk tolerance is the amount of risk with which you are comfortable.
Choose wisely. There is only one correct answer.
True. It determines your choices of investments, among many other things.
3.
Investment advisors suggest increasing the number of fixed-income securities in your portfolio as you age because _______.
Choose wisely. There is only one correct answer.
Advanced age makes it difficult to regain losses from more volatile investments such as stocks. Having fixed-income securities in your portfolio can reduce this problem.
4.
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.
5.
Investment risk is the risk that one may never have enough resources to begin investing.
Choose wisely. There is only one correct answer.
False. Investment risk is the chance of loss due to the uncertainty of future events.
6.
Mutual fund holdings are allocated to meet certain ________.
Choose wisely. There is only one correct answer.
Investment goals. With investment goals in mind, mutual fund managers can meet all their other objectives.