Future Business Leaders of America (FBLA) Securities and Investments Practice Test

Which investment strategy focuses primarily on maximizing income?

1. Growth strategy

2. Value strategy

3. Income strategy

4. Speculation strategy

The correct answer is: Income strategy

The income strategy is specifically designed to generate income for investors, primarily through the investment in assets that provide regular income streams. This typically includes dividend-paying stocks, bonds, or real estate investment trusts (REITs), which offer consistent payouts to investors. The primary focus of the income strategy is to maximize cash flow and generate a reliable income source rather than achieving high capital gains. In contrast, a growth strategy emphasizes capital appreciation over time, aiming to invest in companies or assets expected to grow at a faster rate than the market average. A value strategy seeks undervalued assets that are expected to increase in worth, focusing on the investment’s intrinsic value rather than current income. Lastly, speculation strategy involves high-risk investments with the goal of making substantial profits from price fluctuations, without a primary focus on generating income. The income strategy stands out because its goal is explicitly centered around maximizing regular income for the investor, making it the correct choice.