Can You Spot the Bad Investment?
Medium-difficulty multiple-choice quiz testing core mindsets, frameworks, and behaviors that reveal poor investments or allocation of time, money, and effort.
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Quiz Questions & Answers
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Question 1: Which sign most reliably indicates an investment has poor optionality?
It requires occasional monitoring
Returns depend on one narrow outcome
It has predictable small cash flows
Question 2: When evaluating a startup, which mindset best flags a likely bad investment?
Focusing on vanity metrics over unit economics
Modeling multiple growth scenarios
Emphasizing customer feedback during iteration
Question 3: Which behavior often precedes bad long-term investment returns?
Holding a long-term allocation despite volatility
Diversifying across uncorrelated assets
Chasing recent hot trends without edge
Question 4: Which framework helps expose overconfidence that makes investments risky?
Relying solely on founder charisma
Pre-mortem analysis identifying failure modes
Ignoring downside scenarios
Question 5: Which consequence typically follows ignoring marginal return per hour when choosing projects?
Improved multi-tasking efficiency
Wasted high-value time on low-impact work
Faster completion of core priorities
Question 6: In asset selection, which scenario is a red flag for liquidity risk?
Assets traded infrequently with unpredictable spreads
Tightly regulated exchange listings
Clear market price discovery
Question 7: Which myth about diversification often leads investors astray?
Global exposure can reduce home bias
Diversification includes multiple asset classes
More holdings always lower portfolio risk
Question 8: Which evaluation exposes a business model likely to be a bad investment?
Customer acquisition cost declines with scale
Unit economics require perpetual subsidies to scale
Revenue grows faster than operating costs
Question 9: Which mindset helps avoid falling for sunk-cost traps?
Decision by marginal future value not past spend
Ignoring future opportunity costs
Doubling down to justify earlier bets
Question 10: Which sign in due diligence indicates overly optimistic projections?
Conservative assumptions about conversion rates
Projections assume market share gains without execution plan
Projections stress-tested across scenarios
Question 11: Which investment structure often hides principal-agent problems?
Transparent profit-sharing tied to outcomes
Opaque incentive fees disconnected from long-term returns
Simple equity with voting rights
Question 12: Which scenario best demonstrates confirmation bias harming investment judgment?
Using external auditors for checks
Seeking only favorable reports and ignoring red flags
Actively soliciting dissenting views
Question 13: Which allocation is likely a bad investment of human capital?
Focusing on tasks with low leverage and no skill growth
Networking within relevant fields
Deliberate practice in core comparative strengths
Question 14: Which characteristic of an offer suggests it primarily transfers risk to the investor?
Includes clear downside buffers
Promises upside with few downside protections
Aligns interests via milestone payments