Investment Strategy Quizzes

In the U.S. corporations are moving away from offering Defined Benefit Retirement plans and are increasingly using Defined Contribution plans.

True

Which of the following is helping drive up inflation in the U.S. in 2021?

Used car prices, Supply chain disruptions and bottlenecks, Commodity prices including lumber, oil, and natural gas

Many of the most successful investors view ________ as opportunity.

Volatility

Which of the following assets failed to record an all-time high in 2021?

WTI Crude Oil

Based on the WSJ article regarding Morningstar on Carmen, which of the following is not a key takeaway?

5 star funds are selected based on past performance, but are predictive of future performance

Based on the 121 year history in the Credit Suisse Yearbook, U.S. equities had an annual return of ____ in nominal terms.

9.7%

Which type of information can be leveraged when looking at specific investors that can lead the market?

A large stock purchase by the company's CEO, Large increases in company insiders selling stock, and Changes in short interest for a stock or industry

If you notice that prices start drifting up before good news reaches the market, what would you view it as a sign of?

A market where there is leakage of insider information

__________is a strategy that imagines why a decision failed and then works backward to determine the potential obstacles and reasons that lead to a bad outcome. It can help the investment process by determining the appropriate position size and by reducing the emotional impact inherent in investing.

A premortem

Which of the following statements best describes the returns earned by target and acquiring company stockholders from acquisitions?

Acquiring company stockholders lose money a significant proportion of the time but target company stockholders make significant positive returns.

This week, Jack Dorsey announced he was stepping down as Twitter's CEO which was another item that Elliott Management has pushed for. What type of investment strategy is Elliott Management pursuing in regards to Twitter?

Activist Investing

The case Shiller Home Price index rose 19.1% year over year in Jun 2021 which lifted the median home price to a record. Historically low mortgage rates and a lack of supply are two major factors driving the price appreciation. The 10 year treasury yield is the base rate for the 30 year mortgage. What is the current yield on the 10 year treasury?

Between 1.11 - 1.5%

If you believe that markets over react to news, which of the following actions would you take to generate excess returns?

Buy immediately if stock prices drop significantly on a news announcement

What was a takeaway from the failure of the Nifty 50 investment strategy that was popular in the 1960s and early 1970s?

Buying fast growing companies regardless of the price/valuation is not a sustainable long-term strategy for outperformance

Which of the following would not currently be considered a tailwind for the U.S equity market?

Current valuations (i.e. PE of the S&P500)

While growth stocks have historically delivered lower returns than value stocks, on a risk-‐adjusted basis, there have been periods in history where growth stocks have outperformed. In which of the following macroeconomic scenarios are growth stocks most likely to outperform value stocks?

Downward sloping yield curve and high inflation

Which of the following comprises the FED's dual mandate?

Full Employment; 2% Inflation Target

Which type of alternative data was leveraged when the CEO of Foursquare correctly predicted (based on user data from Foresquare's mobile app) that Chipotle's quarterly sales would be down nearly 30 percent?

Geolocation

In long period returns (3 to 5 year returns), there is evidence of the losers of the last period tend to become winners over the next few periods. Assume that you decide to take advantage of this by adopting a contrarian strategy of buying the stocks that have gone down the most in the past five years. Which of the following would concern you about this portfolio?

Given the price performance, many of the companies will have low priced stocks, with high transactions costs, The drop in stock prices may also have increased financial leverage (debt ratios) at these companies and made them riskier equity investments, and Some of these companies might be in declining businesses where there are no turnaround prospects.

The U.S. experienced the longest bull market in equities from March 2009 - February 2020. What strategy over this timeframe performed best in U.S. large cap equities?

Growth

Based on the working paper, Is the American Public Corporation in Trouble?, which of the following is NOT a difference in U.S companies over the past 40 years?

Institutional ownership has declined

Which of the following is an investment philosophy (as opposed to an investment strategy)?

Invest on the belief that investors over react to important news and announcements and that markets correct themselves over time.

Which of the following combinations would be the best option for a Value Investor when conducting an equity screen?

Low PE & PB multiples, positive earnings growth, low risk, high returns on investments

If you are an active investor in U.S. large cap equities, which of the following propositions about market efficiency would you need to subscribe to?

Markets are for the most part efficient, but have periods and pockets of inefficiency

____________ can guide an individual's perception of the world, but may limit the amount and type of information used when making investment decisions.

Mental models

Mutual funds vary in terms of time horizon and trading volume. Which of the following best summarizes the evidence on the link between trading and performance?

Mutual funds that trade more (have higher turnover ratios) have lower total returns and lower risk adjusted returns than the market.

This week West Texas Intermediate oil price per barrel hit a 7 year high. What was the catalyst that pushed oil higher?

OPEC+ agreed to continue increasing production by 400,000 barrels a day in monthly installments

Which of the following is NOT a takeaway from the Charles Schwab 20 year market timing study in relation to using dollar cost averaging as an investment strategy?

Produces the highest returns

Which of the following Technical Analysis studies measures the velocity of a security's price movement to identify overbought and oversold conditions?

RSI

Based on management discussions during quarterly earnings calls, which of the following is a trend that U.S. publicly traded large cap companies (including Starbucks, P&G, McDonalds, and Chipotle) are currently pursuing to address inflation pressures?

Raising the price products

Which of the following equity indices has the highest returns year-to-date (as of October 5th)?

S&P 500

___________ funds use a set of investment strategies that emphasizes capturing investment factors or market inefficiencies in a rules-based way.

Smart Beta

Which of the following is not a common characteristic of hedge funds?

Target outperformance/alpha over a benchmark

This week, Federal Reserve Chairman Jerome Powell said which of the following during a Senate hearing?

That the Fed is considering accelerating the reduction of its asset-purchase program & That it is time to retire the word transitory regarding inflation

High PE stocks have historically delivered lower annual returns than low PE stocks. If you are a growth investor, which of the following justifications may you offer for still making an investment in a high PE stocks?

There are periods where high PE stocks do better than low PE stocks, and you are good at timing these periods.

The SEC requires institutional investment managers with $100 million or more in equity assets under management to file quarterly 13F reports that disclose holdings data. Which of the following is a drawback of analyzing 13F reports?

They do not disclose short positions, they are backward looking, & the SEC does not confirm the accuracy of the filing

Which Fixed Income strategy is designed to seek consistent, attractive returns across all market cycles, while attempting to outperform a benchmark?

Total Return

Which of the following is an explicit trading cost?

Trading commissions

Recently, a(n) _________ investor took a large stake in Royal Dutch Shell and requested the break into two companies to potentially unlock value for shareholders.

activist

In terms of alternative data, _______________ can be utilized for tracking the health of major retailers, detecting real-time levels of oil inventories, and mine production.

satellite imagery