Quiz 2 | Schoology 09:36, 28/08/2023 COURSES GROUPS RESOURCES GRADES Vi Quân Võ Home > Portfolio Management: Fall 2023 > Quiz 2 > Attempt 1 Quiz 2 ATTEMPT SCORE 12 / 15 01 Multiple Choice 1/1 Which of the following characteristics of asset classes is most desirable? Asset classes should: be correlated with each other. be mutually exclusive. have an index 02 Multiple Choice 1/1 Which of the following statements about the steps in the portfolio management process is NOT correct? Developing an investment strategy is based on an analysis of historical performance in financial markets and economic conditions Implementing the plan is based on an analysis of the current and future forecast of financial and economic conditions Rebalancing the investor's portfolio is done on an as-needed basis, and should be reviewed on a regular schedule. 03 Multiple Choice 1/1 Which of the following is the most difficult to quantify, while preparing an investment policy statement? Time horizon Willingness to take risk. Ability to take risk. 04 Multiple Choice 1/1 Analyst 1: A written IPS is part of the best practices for a portfolio manager. Analyst 2: A written IPS ensures the client‟s risk and return objectives can be achieved. https://app.schoology.com/course/6820157073/common-assessment/6820158016 Trang 1 / 4 Quiz 2 | Schoology 09:36, 28/08/2023 Analyst 2: A written IPS ensures the client‟s risk and return objectives can be achieved. Which analyst's statement is most likely correct? Analyst 2 Analyst 1 Both. 05 Multiple Choice 1/1 Tactical asset allocation is a deviation from the strategic asset allocation for the purpose of: aligning with investor’s risk preferences. taking advantage of short-term capital market expectations. exceeding investor’s return objectives. 06 Multiple Choice 0/1 Which of the following investment objectives is most likely associated with asset-only asset allocation approaches? Maximizing expected return per unit of risk. Funding liabilities when they come due. Meeting specific goals within a certain degree of confidence. 07 Multiple Choice 1/1 Strategic asset allocation: sets a portfolio’s asset class exposures to unsystematic risk involves short-term variations from an investor’s normal asset mix establishes a portfolio’s long-term asset class exposures by integrating each element of investment policy with capital market expectations. 08 Multiple Choice 1/1 Dean Jones is 43 years old and has a secure job with an annual salary of AUD 300,000. The income is sufficient to cover his and his family‟s expenses. He owns the house his family lives in and has savings of AUD 1,000,000. Jones is reluctant to invest in the stock market because he believes that stock market returns are based on luck. Furthermore, the thought of losing money causes him to have sleepless nights. Based on this information which of the following statements is most accurate? Jones has a low ability to take risk but a high willingness to take risk. Jones has a high ability to take risk but a low willingness to take risk. https://app.schoology.com/course/6820157073/common-assessment/6820158016 Trang 2 / 4 Quiz 2 | Schoology 09:36, 28/08/2023 Jones has a high ability to take risk and a high willingness to take risk. 09 Multiple Choice 1/1 A client exhibits an above-average willingness to take risk but a below-average ability to take risk. When assigning an overall risk tolerance, the investment adviser is most likely to assess the client’s overall risk tolerance as: above average. average. below average. 10 Multiple Choice 1/1 Which of the following statements about the importance of risk and return in the investment objective is least accurate? The return objective may be stated in dollar amounts even if the risk objective is stated in percentages. Expressing investment goals in terms of risk is more appropriate than expressing goals in terms of return The investor's risk tolerance is likely to determine what level of return will be feasible. 11 Multiple Choice 0/1 A financial advisor gathers the following information about a new client: 1. The client is a famous physics professor at one of the biggest universities in New York. 2. The client owns a penthouse and two cars with currently zero outstanding debt. 3. The client is currently working full-time and plans to continue this way for another five years after which he will work part time for 4 years before retirement. 4. The client has accumulated retirement savings of approximately $ 1.75 million through their employer‟s retirement plan and anticipates retirement spending needs of $80,000 per year. 5. Despite the concern regarding the current condition of the global economy, the client maintains to remain a long-term investor. 6. The client follows numerous financial publications closely and is aware of the evolving markets. Based on the above information, which of the following best describes this client? High ability to take risk and a high willingness to take risk. High ability to take risk, but a low willingness to take risk. Low ability to take risk, but a high willingness to take risk. https://app.schoology.com/course/6820157073/common-assessment/6820158016 Trang 3 / 4 Quiz 2 | Schoology 09:36, 28/08/2023 12 Multiple Choice 0/1 An investment policy statement that includes a return objective of "No greater than a 6% probability of a loss of more than $34,500 over any 12-month period" is best characterized as having a(n): absolute return objective relative return objective. arbitrage-based return objective 13 Multiple Choice 1/1 Which of the following should least likely be included as a constraint in an investment policy statement (IPS)? Constraints put on investment activities by regulatory agencies. How funds are spent after being withdrawn from the portfolio Any unique needs or preferences an investor may have 14 Multiple Choice 1/1 High risk tolerance, a long investment horizon, and low liquidity needs are most likely to characterize the investment needs of a(n): bank insurance company defined benefit pension plan 15 Multiple Choice 1/1 Which of the following is least likely an example of a portfolio constraint? Significant spending requirements in the long run Minimum total return requirement of 10%. Higher tax rate on capital gains than on dividend income. https://app.schoology.com/course/6820157073/common-assessment/6820158016 Trang 4 / 4
