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English Language RC - Oct 09 2020

Here we are providing new series of English Language Questions for upcoming exams, so the aspirants can practice it on a daily basis.

Read the passage carefully and answer the questions given below the passage.

Current times are certainly abnormal as we are amidst a black swan pandemic. One could look at historical archives for an effective strategy to safeguard the financial future. Some investors believe that this is the “END OF THE WORLD”, but a few others prefer to be more realistic and respond with “THIS TOO SHALL PASS”. Markets are made up of 2 emotions, Greed and Fear; and an investor needs to strike a balance between the two. This however is easier said than done during times like these.

The Covid-19 pandemic led market mayhem has been a black swan event and has managed to play with investors’ minds leading to irrational decisions wherein all fundamental and technical theses were thrown out of the window. This meant that fear had taken centre stage, and not many were aware that this was actually the time to be selectively greedy. Markets tend to move ahead of the economy, price in crisis and then move on to capture future recovery. Thus, investors cannot wait for resolutions of the issues that led to the market fall, as the risk of missing opportunities is very high. It is high time to be rational and display some long-term patience.

Life has changed dramatically in these current times and it has managed to significantly impact multiple sectors of the economy, both positively and negatively. As we prepare for a “new normal” post-pandemic world, there ought to be both winners and losers. We as investors need to be smart enough to sail through times like these. But do we have an easy yet effective way or a set template to get out of the rut? Maybe yes, with the help of a well-diversified portfolio, but it might not be so easy, as it must encapsulate strategic and tactical asset allocations as well, based on the fast-changing economy.

Investors should take a long-term approach of investing and construct a high-quality portfolio as a part of their strategic asset allocation. The proverb, “do not put all your eggs in the same basket” makes more sense during times like these. Investors should cut out the white noise and take a broader view to avoid getting caught up with biased individual stories. A trusted advisor can also help reach the ideal strategic asset allocation keeping in mind the risk profiling of an investor. When it comes to long term investing, only a well-diversified portfolio consisting of asset classes like high-quality equity and debt instruments, offshore investments, safe-haven gold, and other alternatives can serve as a hedge for the unforeseeable future.

But more importantly, it is the act of periodically rebalancing the portfolio of an investor based on tactical asset allocation that could prove to be the most effective and efficient way ahead.For example, when the dollar index was falling, and the interest rates were at an all-time low, going overweight on gold could have helped investors maintain the shape of their overall portfolio as gold is typically inversely related to the dollar index, had the cushion of low holding costs thanks to easy monetary conditions and hence, was bound to make greater highs.

The investors have to be proactive to grab hold of any opportunity that comes their way, as a small tactical change of going overweight or underweight on a certain asset class can make a whole world of difference to their long term portfolio. But they should bear in mind that even with a well chalked out asset-allocation framework, the markets are bound to throw up surprises and only conviction in the investments and patience will serve their purpose.

1) What is the meaning of the metaphor “black swan” given in bold in the passage?

a) Terrible disaster

b) a rare and unexpected event with significant consequences.

c) a rare and unexpected event with no significant consequences.

d) a common but unexpected event with significant consequences.

e) None of these

2) What is the meaning of the idiom “thrown out of the window” given in bold in the passage?

a) to deny

b) to accept something

c) to start using or thinking about (something)

d) to stop using or thinking about (something)

e) None of these

3) What is the meaning of the proverb “do not put all your eggs in the same basket” given in bold in the passage?

a) one should focus on success

b) one should concentrate all efforts and resources in one area

c) one should not concentrate all efforts and resources in one area as one could lose everything

d) Both (a) and (b)

e) None of these

4) Fill the blank with information from the passage.

It is the act of periodically rebalancing the portfolio of an investor based on tactical asset allocation that could prove to be the _______________________________?

a)most effective and inefficient way ahead.

b)most destructive and inefficient way ahead.

c) least effective and efficient way ahead.

d)most effective and efficient way ahead.

e) None of these

5) Fill the blank with information from the passage.

Investors should take_______________________________________________________?

a)a long-term approach of investing and construct a high-quality portfolio as a part of their strategic destruction.

b)a long-term approach of investing and construct a low-quality portfolio as a part of their strategic asset allocation.

c) a long-term approach of investing and construct a high-quality portfolio as a part of their strategic asset allocation.

d) a short-term approach of investing and construct a high-quality portfolio as a part of their strategic asset allocation.

e) None of these

Answers :

1) Answer: B

Black swan- a rare and unexpected event with significant consequences.

Hence (b) is correct.

2) Answer: D

Throw (something) out of the window- to stop using or thinking about (something).

Hence (d) is correct.

3) Answer: C

“do not put all your eggs in the same basket”- This is a piece of advice which means that one should not concentrate all efforts and resources in one area as one could lose everything.

Hence (c) is correct.

4) Answer: D

It is mentioned in the 2nd last paragraph “But more importantly, it is the act of periodically rebalancing the portfolio of an investor based on tactical asset allocation that could prove to be the most effective and efficient way ahead.”.

Hence (d) is correct.

5) Answer: C

It is mentioned in the 4th paragraph “Investors should take a long-term approach of investing and construct a high-quality portfolio as a part of their strategic asset allocation.”.

Hence (c) is true.