What is the primary purpose of owning an asset?

"To generate immediate income" "To speculate on short-term price fluctuations" "To transfer wealth across time" "To avoid paying taxes"

Why is stuffing money under a mattress considered a losing strategy?

"Mattresses are prone to attracting pests" "Money loses its purchasing power due to inflation" "It's difficult to track expenses when cash is not in a bank" "The government can confiscate hidden cash"

Which of the following is NOT a characteristic that makes gold a desirable store of wealth?

"Rarity, ensuring limited supply" "Difficult to mine and process, limiting additional supply" "Easily understood, measured, and assessed" "High volatility, leading to quick profits"

What is the key difference between real estate and precious metals as assets?

"Real estate is more liquid than precious metals" "Precious metals are more prone to inflation than real estate" "Real estate is not fungible, while precious metals are" "Precious metals are regulated by governments, while real estate is not"

What advantage do financial assets traded on exchanges have over other assets?

"They are immune to market fluctuations" "They are not subject to government regulations" "They benefit from standardization and uniform regulations" "They always generate higher returns than other assets"

What is the practice of dividing one's savings among different asset types called?

"Portfolio diversification" "Risk management" "Asset allocation" "Financial planning"

Why is predicting which asset will yield the best returns impossible?

"Market performance is influenced by unpredictable factors" "Financial advisors have access to insider information" "Government policies dictate market trends" "Asset prices are fixed by central banks"

What is sequence risk in investment?

"The risk of investing in a declining market" "The risk of not diversifying investments" "The risk of experiencing negative returns consecutively during the investment period" "The risk of losing all invested capital"

What is the primary consideration when creating a diversified portfolio?

"Investing in the highest-yielding assets" "Including as many different assets as possible" "Understanding the factors driving each asset's returns and their correlations" "Following the advice of financial experts"

What is a potential risk of financialization of assets?

"It makes diversification more complex" "It increases the correlation between different asset classes" "It makes assets less accessible to average investors" "It leads to higher transaction costs"