MGT12 ( Week 9 Investing basics quiz)

What is the benefit to a mix of International and US stocks instead of only US stocks (i.e., 100% invested in US stocks)?

The mix of international and US stocks reduces the volatility of returns.

Based on the videos, what is a typical rule of thumb for bond allocation in an investment portfolio?

The percent allocated to bonds should be approximately your age

It is sound advice to take more investment risks when you are young, and less risk as you approach retirement.

True

Choose the 3 main asset classes for financial investments from below.

1. Cash 2. Fixed income (Bonds) 3. Equities (Stocks)

Which of the following is the most common method for a client to pay a fee to a financial advisor?

Clients pay a percentage of assets under management, which is automatically deducted from the investment account.

Index Funds

Invest in securities (e.g., stocks) to deliver the return of a benchmark (like the S&P 500).

What is NOT a typical form of Mutual Funds?

Long-Short Funds

What is NOT a benefit of an Equity Index Fund over an Actively Managed Equity Mutual Fund?

Regularly beat the S&P 500

Why is it so difficult to consistently beat the market (i.e., earn a return on your stock investments that beats the market return)?

Stock markets are very competitive, so finding underpriced investments is very difficult.