Which of the following statements best describes ethical investments?

Prepare for the UAE First Gulf Exchange Exam with our comprehensive quiz. Study using multiple choice questions, each with hints and explanations. Get ready to excel in your exam!

Ethical investments are characterized by the exclusion of certain industries or companies that do not align with specific moral or ethical guidelines. This approach typically involves avoiding investments in sectors such as tobacco, firearms, fossil fuels, or industries associated with human rights abuses. By applying these ethical filters, investors aim to ensure that their portfolios reflect their values and beliefs. This investment strategy often combines financial goals with a commitment to social responsibility and sustainability, making it distinct from purely financial-driven investment strategies.

In contrast, choices that focus solely on financial returns or include all sectors without restrictions do not account for ethical considerations, which is a key aspect of ethical investments. Similarly, emphasizing only government bonds narrows the range of investment options and fails to consider ethical dimensions, which can apply to various asset classes beyond just fixed-income securities.

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