Quiz - Investing

Question 1

Growth asset

Answer 1

assets that aim for capital growth

Question 2

defensive asset

Answer 2

assets that aim to create a strong steady source of income

Question 3

negative screening

Answer 3

actively avoiding investing in companies that are unethical (e.g. coal-mining companies)

Question 4

positive screening

Answer 4

only investing in companies that are ethically desirable (e.g. renewable energy companies)

Question 5

Outline 4 risk management strategies

Answer 5

Reduce the risk → diversify investment types so that a high loss is less likely
Avoid the risk → don’t invest in risky assets
Manage the risk → actively monitor and record profits and losses and adjust accordingly
Transfer the risk → giving the risk to other parties such as financial managers
and advisers to manage on your behalf. they are usually more knowledgeable.

Question 6

What does ASIC stand for, and what is it’s role?

Answer 6

ASIC stands for Australian Securities and Investment Commission. Their role is to (1) give financial advisers official licences to ensure they are properly qualified and (2) enforce the law to protect Australian consumers and investors.