Australian Investment Performance Quiz
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Questions and Answers

According to the text, what is the historical average return on equities in Australia?

  • 10-11.5% (correct)
  • 15-16%
  • 2-3%
  • 4-6%

    • According to the text, what is the historical equity premium?

  • 2-3%
  • 4-6% (correct)
  • 12-14%
  • 8-10%

    • According to the text, what is the main factor contributing to portfolio return?

  • Asset allocation (correct)
  • Security selection
  • Diversification principles
  • Risk tolerance

    • According to the text, what is the main purpose of asset allocation in portfolio construction?

    <p>To determine the percentage of funds invested in different asset classes</p> Signup and view all the answers

    According to the text, what is the second step in constructing a diversified investment portfolio?

    <p>Security selection</p> Signup and view all the answers

    According to the text, what is the main difference between active and passive management styles?

    <p>Active management aims to outperform the market, while passive management aims to match the market</p> Signup and view all the answers

    According to the text, what is the main reason for the little value added in the selection of specific assets within asset classes?

    <p>Inconsistency with theoretical diversification principles</p> Signup and view all the answers

    According to the text, what is the main factor determining the two-step process of constructing a diversified investment portfolio?

    <p>Investor risk tolerance</p> Signup and view all the answers

    According to the text, what is the main purpose of investment strategies?

    <p>To maximize expected return</p> Signup and view all the answers

    According to the text, what is the historical evidence regarding 'real' rates of return over time?

    <p>They have remained relatively constant</p> Signup and view all the answers

    Which type of investment has typically provided stable and higher long-term returns compared to other assets?

    <p>Equities</p> Signup and view all the answers

    What can happen to short-term investments in equities?

    <p>They can lead to losses due to market volatility</p> Signup and view all the answers

    During the 2008 Global Financial Crisis, what happened to the S&P/ASX200 Index?

    <p>It dropped from nearly 7000 to below 3500 points</p> Signup and view all the answers

    Where can you buy and sell listed shares in Australia?

    <p>Through the Australian Stock Exchange (ASX)</p> Signup and view all the answers

    What is the 'paradox' of the Efficient Markets Hypothesis (EMH)?

    <p>Information has already been impounded into share prices</p> Signup and view all the answers

    What is technical analysis, or charting, based on?

    <p>Price history charts and other indicators</p> Signup and view all the answers

    What do technical analysts evaluate in financial time series?

    <p>Patterns, indicators, trends, and bull/bear dominance</p> Signup and view all the answers

    Where can you find real-time share prices for ASX-listed companies?

    <p>Both on the ASX website and in the daily financial press</p> Signup and view all the answers

    What forms of documentation relate to a shareholding?

    <p>Contract note, Holding Statement, and dividend statement</p> Signup and view all the answers

    Which type of transaction is usually the cheapest?

    <p>Transacting online</p> Signup and view all the answers

    What is the main difference between strategic asset allocation (SAA) and tactical asset allocation (TAA)?

    <p>SAA assumes efficient pricing, while TAA assumes mispricing</p> Signup and view all the answers

    What is the main objective of strategic asset allocation (SAA)?

    <p>To identify efficient allocation amongst asset classes</p> Signup and view all the answers

    Which of the following is true about tactical asset allocation (TAA)?

    <p>Managers choose it if they believe certain asset classes are mispriced</p> Signup and view all the answers

    Which of the following best describes strategic asset allocation (SAA)?

    <p>Setting target allocations amongst asset classes</p> Signup and view all the answers

    What is dynamic asset allocation (DAA) primarily associated with?

    <p>Periodic rebalancing of portfolio weights</p> Signup and view all the answers

    What is the purpose of market timing in tactical asset allocation (TAA)?

    <p>To profit from timing aggregate market movements</p> Signup and view all the answers

    What is the reason for an equity risk premium?

    <p>Equity represents a residual claim on the cashflows generated by the assets of the firm</p> Signup and view all the answers

    Which of the following methods is NOT a principal method of equity capital raising?

    <p>Dividend reinvestment plan</p> Signup and view all the answers

    What is the main difference between direct and indirect investment in equity?

    <p>Direct investment involves purchasing shares, while indirect investment does not</p> Signup and view all the answers

    What determines the allocation of funds to different asset management teams?

    <p>The fund's investment philosophy</p> Signup and view all the answers

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