1. Proper diversification takes place across...

A. different classes of securities, sectors of the economy, and political regions

B. different classes of securities, sectors of the economy, and geographical regions.

C. same classes of securities, sectors of the economy, and geographical regions

2. Rebalancing is a method used to return a portfolio to new target allocation at annual intervals. It is important for retaining the asset mix that best reflects an manager's risk/return profile.

A.True

B.False

3. Which type of risks does a passive investment try to eliminate?

A. Undiversifiable market risk

B. Systematic risk

C. Unsystematic risk