Question

1. Which of the following assets would you expect to be the most liquid?

a.Money market securities

b. Long term debt

c.Equity

d. Preferred shares

2. If you believe in the strong form efficient market hypothesis, which one of these is a bad reason to hire a money manager?

a.To optimize your portfolio for your individual risk tolerance

b. To build a portfolio with an unusually high Sharpe ratio

c.To minimize your tax liability

d. To efficiently handle the paperwork involved with your investments

3. TINSTAAFL suggests that:

a.You should be very careful if you think you have found a way to make free money

b. Star investment advisors will rarely be worth their fees

c. There is a price to be paid for unusually high returns, whether it is in effort or in risk

d. All of the above

Answer 1

1. Money market isntrument

Money market instruments are the market that has maturity of less than 1 year and considered as the most liquid as it can be converted into cash easily.

2. The Correct option is B

According to the semi strong form of efficiency, share price reflects all the information available publicly quicly, the investors can not make return that is greater than the market even while performing technical or fundamentaql analysis.

3. All of the above

TINSTAAFL means there is no such thing as a free lunch which states that for every return or the efforts there is a price to be paid whether it is in form of cost, decision making or the investment and brokerage fees.