I have included quizzes before and this one again is designed to test your expert understanding of the workings of investment markets. As most of my readers are quite experienced, the questions are in the main not the sort one can answer with multiple choice box ticking!
In fact, the answers are more of the ‘short essay’ type in most cases, not that I expect you to actually write them out! I recommend thinking about what you know and deciding how confident you are that you have got to grips with the relevant topic.
I also have no intention of writing out the answers, but will publish a video with reasonably in depth explanations in about a week’s time, so get thinking!
I hope you won’t just use Google or AI, but if you are really stuck, that will still help you learn.
The Questions
- List 5 of the main high level asset types available to UK retail investors and the type of legal instruments that could be used to buy them
- Explain in brief terms 3 different ways of diversifying investment risk and give examples for each one.
- A media company trading in the USA was listed on the NASDAQ in 2017 and is valued by the market at 300 billion USD. It has a P/E of 41 and pays a dividend at 0.3%. Is this a growth or value stock?
- Another company listed in the UK mid-250 was spun out of a bigger group 3 years ago, although its business has existed for decades. Its P/E ratio is 11.2 and it pays a dividend of 3.8%. It is thought to be a takeover target with US interest in the public domain. What IA sectors would perhaps include funds that would own this share?
- What do AUM or FUM mean? Why is that data relevant if you are reading an opinion from a fund manager about the prospects for the market sector in which they invest?
- Why are investment trusts (IT’s) more likely to be more risky than OEICs, by absolute certain operation of UK law? Have you heard of SABA?
- Why might selecting investments in the IA sectors Emerging Markets and Asia Pacific ex-Japan offer very little diversification?
- Why do growth equity funds fall more in value than high dividend value funds when interest rates rise?
- List 3 reasons why an investor mnight see some merit in investing in a muti-asset, passive tracker fund (eg Vanguard Lifestrategy) instead of running their own portfolio?
- Now list as many disadvantages as you can think of that would need to be understood before taking such a decision.
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