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Investment Principles and Common Guidelines Quiz

12 Questions

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Investment Principles and Common Guidelines Quiz

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Questions and Answers

What is the cost of capital related to in the investment environment?

The time period for which the investment will be held

The laws governing investment activities

The cost of acquiring funds for investment (correct)

The expected return on investment

How is risk defined in the context of investment?

The financial gains from investing

The probability of losing money due to market changes

The likelihood of success in an investment

The uncertainty associated with an investment (correct)

What does the concept of risk and return in finance suggest?

High-risk investments generally yield better returns (correct)

Low-risk investments yield the highest returns

Low-risk investments always provide high returns

High-risk investments never generate higher revenue

Which type of risk is characterized by impact on everything due to inherent financial and economic systems?

Market risk Signup and view all the answers

What is return usually presented as in investments?

Percentage relative to the original investment Signup and view all the answers

Which factor influences investment decisions by offering tax reductions, grants, and subsidies?

Fiscal incentives Signup and view all the answers

What is the purpose of investment principles?

To help manage risk and achieve financial goals Signup and view all the answers

What is the process of spreading investments across different asset classes to reduce overall portfolio risk called?

Diversification Signup and view all the answers

How does asset allocation help in investment decisions?

By minimizing risk Signup and view all the answers

What is the purpose of cost management in investments?

To maximize net returns by minimizing costs Signup and view all the answers

What is the risk-free rate associated with in investments?

The return on a short-term government bond Signup and view all the answers

What does the term 'investment environment' refer to?

The factors and conditions influencing investment decisions and outcomes Signup and view all the answers