1. What is the correlation with the greatest potential for diversification? A: -1.0 B: -0.5 C: 0.0 D: +1.0 E: +2.0

2. Regular, periodic investments in a security without regard to price is A: income averaging. B: dollar cost averaging. C: dividend reinvesting. D: fundamental investing. E: time investing.

3. Hedging strategies are A: designed to limit investment losses. B: a form of investment insurance. C: transfers risk from one entity to another. D: all of these statements are true. E: statements A and C are true, but B is not.

4. Investors should consider using financial leverage when they A: feel confident that the investment itself can generate sufficient cash flow to cover debt service. B: expect high inflation. C: do not have the available cash to finance the purchase of a particular asset. D: can borrow money at a rate lower than the expected return on an investment. E: all of these choices are true.