You must score at least 80% to complete this chapter.

1. What is the process of identifying investor's risks appetite called?

2. Which statement is correct?

3. Risk profiling tools should not be used because they reduce investor confidence and mislead them. True or False?

4. Which asset allocation strategy is riskier?

5. A financial advisor recommends to an investor that he should have as much debt in his portfolio as his age. Which type of asset allocation is he recommending to the investor?

6. An investor invested in mid cap schemes one year ago and earned phenomenal returns. Now he is investing all of his savings in mid cap schemes and advising others to follow his advice as his investment acumen can earn them more than 20% returns p.a. Which bias is he suffering from?

7. After a long recession, the equity market has started to rise. Mr. Khan has withdrawn money from Fixed Deposit to purchase a house, but the final payment has to be made after 2 months. Where should he invest the money?

8. Who among the following will have the largest risk appetite?

9. A couple in seventies who has never invested in equity, now wishes to start an SIP of a small amount in equity. Which category of scheme would you suggest?

10. __________ leads to creation of bubble in the market because the investors enter when the market is already overheated.

11. Timing the market is an important characteristic of Strategic Asset Allocation. True or False?

12. Which of the following statements is correct?

13. The market has been experiencing a bull run and pharma sector has performed very well. A critical legislation is pending in the parliament, which if passed will lead to fall in the price of stocks of pharma sector. An investor has checked the 1-year, 3-year performance of the sector and is confident that sector will give good returns in the future. Which bias is the investor exhibiting?

14. Tactical allocation is suitable only for seasoned investors. True or False?

15. Why is risk profiling done?

16. A couple in seventies should invest in only debt mutual funds and not equity. True or False?

17. Which portfolio is best suited for a single income family with children who have not settled?

18. The asset allocation which is based on risk profiling of investor is called ___

19. When an investor's capital base rises, his risk appetite __________.

20. Why are risk profiling tools still not an alternative to a good financial planner?

21. The asset allocation decided for an investor based on his Risk profiling refers to -