Investment Purity and Fixed Income Quiz
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Questions and Answers

What is the key difference between investing in equity shares and bonds?

  • Equity investors are owners of the asset, while bond investors are lenders. (correct)
  • Equity shares are traded on the stock exchange, while bonds are not.
  • Equity shares have a higher risk profile than bonds.
  • Equity shares provide a fixed return, while bonds have uncertain returns.

    • Which of the following asset classes is most likely to generate a predictable, periodic cash flow?

  • Equity shares
  • Bonds (correct)
  • Commodities
  • Real estate

    • What is the key advantage of investing in foreign equity shares compared to domestic equity shares?

  • Foreign equity shares provide exposure to another currency. (correct)
  • Foreign equity shares have higher returns.
  • Foreign equity shares are more liquid.
  • Foreign equity shares have lower risk.

    • Which of the following asset classes is most likely to provide capital appreciation?

    <p>Equity shares</p> Signup and view all the answers

    Why are the future returns from equity, real estate and commodities considered highly uncertain?

    <p>Because the investor's cash flows or receipts are unknown in these asset classes.</p> Signup and view all the answers

    Which of the following statements about the bond market is most accurate?

    <p>The bond market is characterized by high liquidity and transparency.</p> Signup and view all the answers

    Why are commodities not considered to be a source of intermittent cash flow?

    <p>Commodities do not generate any income or dividends.</p> Signup and view all the answers

    Which of the following is the most accurate description of a fixed-income security?

    <p>A financial instrument that provides a guaranteed, fixed rate of return.</p> Signup and view all the answers

    How does the risk profile of investing in gold (a commodity) compare to investing in equity shares?

    <p>Investing in gold has a lower risk profile than investing in equity shares.</p> Signup and view all the answers

    Which of the following is the most accurate statement about the role of fixed-income securities in an investment portfolio?

    <p>Fixed-income securities offer a stable and predictable source of income.</p> Signup and view all the answers

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