Asset Classes: TOEIC Practice Test Questions & Answers

Asset Classes TOEIC Questions Answers English Eduhyme

The TOEIC (Test of English for International Communication) is an English language proficiency test designed to assess the English language skills of non-native speakers in a business or professional context. The test is widely used by organizations around the world to evaluate the English language skills of job candidates, employees, and students.

The TOEIC test consists of two parts: the TOEIC Listening and Reading Test and the TOEIC Speaking and Writing Test. The TOEIC Listening and Reading Test is a paper-and-pencil test that consists of multiple-choice questions, while the TOEIC Speaking and Writing Test is a computer-based test that consists of spoken and written responses to prompts.

The test is designed to measure a wide range of English language skills, including listening comprehension, reading comprehension, speaking ability, and writing ability. Overall, the TOEIC is a widely recognized and respected English language proficiency test that is used by organizations around the world to evaluate the English language skills of non-native speakers.

Q&A Topic: Asset Classes

Asset classes are broad categories of investments that share similar characteristics and are typically managed and valued in the same way. The main asset classes are:

Stocks (Equities): Represent ownership in a company and can provide growth potential and regular income in the form of dividends.
Bonds (Fixed Income): Represent debt owed by a company or government and pay regular interest income to the bondholder.
Cash and Cash Equivalents: Low-risk investments, such as savings accounts and money market funds, that provide a low but relatively stable return.
Real Estate: Involves investment in physical property or real estate investment trusts (REITs) and can provide both income and potential for capital appreciation.
Commodities: Include physical goods such as precious metals, energy products, and agricultural products, and can be traded on commodity exchanges.
Alternative Investments: Include hedge funds, private equity, and other types of investments that do not fit into traditional asset classes and typically involve a higher level of risk.

Investors may choose to invest in a combination of asset classes to diversify their portfolio and reduce overall risk. The allocation of assets among different classes is an important aspect of investment management and is determined based on an individual’s investment goals, risk tolerance, and investment time horizon.

Here are some questions that can help you to clear the TOEIC exam:

Q1 Cathy Smart and the investment analysts at 401k Forum help you get down to the _____________ with this article about the different asset classes.

(a) baseline
(b) basement
(c) basics
(d) basis

Answer: (c) basics

Q2 Asset classes are the categories that your different investments _____________ into — such as cash, bonds, large-cap stocks, small-cap stocks, and international stocks.

(a) fall
(b) fan
(c) sift
(d) sort

Answer: (a) fall

Q3 Studies have shown that the key to successful investing is to _____________ your wealth among different asset classes.

(a) diverge
(b) expand
(c) range
(d) spread

Answer: (d) spread

Q4 Market capitalization (market cap) is a measure of the size and value of a company; to determine this, you simply multiply the number of the company’s _____________ shares of stock by the market price of one share.

(a) corporate
(b) individual
(c) open market
(d) outstanding

Answer: (d) outstanding

Q5 Market capitalization is important because history has shown us that the stocks of companies with different market caps _____________ differently in terms of return and risk.

(a) behave
(b) comply
(c) gain
(d) operate

Answer: (a) behave

Q6 Cap-size shift: mid-cap stocks may have once been defined as large cap, but fell out of _____________ with investors.

(a) concern
(b) favor
(c) line
(d) satisfaction

Answer: (b) favor

Q7 Mid-cap stock performance usually falls somewhere in between the returns of their large- and small-cap _____________.

(a) companions
(b) counterparts
(c) replicas
(d) surrogates

Answer: (b) counterparts

Q8 However, mid- and small-cap stock returns tend to be more _____________ than the returns of large-cap stocks.

(a) vaporous
(b) volatile
(c) voluminous
(d) voracious

Answer: (b) volatile

Q9 If a smaller company loses a few key executives, or if the economy takes a _____________ for the worse, it only takes a few nervous investors to cause the stock to drop drastically.

(a) dive
(b) path
(c) step
(d) turn

Answer: (d) turn

Q10 _____________ can reduce your risk and help protect your investment: if one asset class in your portfolio is performing poorly, there’s a chance that another asset class within your portfolio will be performing well.

(a) Departmentalization
(b) Differentiation
(c) Distribution
(d) Diversification

Answer: (d) Diversification

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