Investment Strategy Quiz
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Questions and Answers

What is the purpose of investing?

  • To commit resources
  • To achieve later benefits
  • To generate a return from the invested asset (correct)
  • To reduce overall risk

    • What is the statistical effect of diversification?

  • It maximizes overall risk
  • It increases overall risk
  • It reduces overall risk (correct)
  • It has no effect on overall risk

    • What is the price-to-earnings ratio (P/E)?

  • A ratio that divides the market capitalization by the earnings per share
  • A ratio that divides the earnings per share by the market capitalization
  • A ratio that divides the share price of the stock by its earnings per share (correct)
  • A ratio that divides the earnings per share by the share price of the stock

    • What do growth investors seek profits through?

    <p>Capital appreciation</p> Signup and view all the answers

    What is momentum investing?

    <p>Investing in stocks that are currently experiencing a short-term uptrend</p> Signup and view all the answers

    What is dollar cost averaging?

    <p>The process of consistently investing a certain amount of money across regular increments of time</p> Signup and view all the answers

    What is micro-investing?

    <p>A type of investment strategy that is designed to make investing regular, accessible, and affordable</p> Signup and view all the answers

    What does free cash flow measure?

    <p>The cash a company generates which is available to its debt and equity investors, after allowing for reinvestment in working capital and capital expenditure</p> Signup and view all the answers

    What is the risk associated with savings?

    <p>The risk that the financial provider may default</p> Signup and view all the answers

    Study Notes

    Investment Strategies: A Comprehensive Overview

    • Investment is a commitment of resources to achieve later benefits.
    • The purpose of investing is to generate a return from the invested asset.
    • Investors generally expect higher returns from riskier investments.
    • Diversification has the statistical effect of reducing overall risk.
    • Savings bear the risk that the financial provider may default.
    • Property buyers can seek to mitigate any potential risk by taking out a mortgage and borrowing at a lower loan to security ratio.
    • The price-to-earnings ratio (P/E) is a fundamental ratio that divides the share price of the stock by its earnings per share.
    • Growth investors seek profits through capital appreciation.
    • Momentum investors generally seek to buy stocks that are currently experiencing a short-term uptrend.
    • Dollar cost averaging is the process of consistently investing a certain amount of money across regular increments of time.
    • Micro-investing is a type of investment strategy that is designed to make investing regular, accessible, and affordable.
    • Free cash flow measures the cash a company generates which is available to its debt and equity investors, after allowing for reinvestment in working capital and capital expenditure.

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    Description

    Test your knowledge on investment strategies with this comprehensive overview quiz! From diversification to dollar cost averaging, this quiz covers important concepts and strategies in investing. Whether you're a beginner or an experienced investor, this quiz will challenge your understanding of key investment principles. Sharpen your investing skills and learn something new with this informative quiz.

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