Question 1

Aggressive investors are more likely to have international stocks than conservative investors.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements regarding inflation and investing is true?

Accepted Answer

A)   Futures are the best hedge against inflation.
B)   Inflation is not a problem in a buy-and-hold strategy.
C)   Common stock is not always a hedge against inflation.
D)   All of the above statements are true.

Question 3

The two steps to establishing an investment policy are to state the:

Accepted Answer

A)   minimum investment and maximum fees.
B)   SEC guidelines for prudent man investing.
C)   objectives and constraints.
D)   asset allocation parameters and time horizons.

Question 4

Which of the following is not a usual constraint and preference considered in formulating an investment policy?

Accepted Answer

A)   Philanthropy requirements
B)   Legal and regulatory requirements
C)   Tax considerations
D)   Time horizon

Question 5

How do the constraints for individual investors compare to those of institutional investors?

Accepted Answer

Individuals impose their own constraints...

Question 6

Strategic asset allocation involves:

Accepted Answer

A)   market timing.
B)   simulation to identify a range of outcomes for various asset mixes.
C)   the life-cycle concept.
D)   individual investors only.

Question 7

One aspect of the tax considerations in asset allocation is that:

Accepted Answer

A)   dividends and capital gains are taxed at a higher rate than interest income.
B)   tax laws in Canada are constantly changing making it difficult to forecast future tax rates.
C)   investors must pay capital gains on an accrual basis.
D)   retirement programs can no longer offer tax sheltering with capital gains and income taxed as ordinary income.

Question 8

Tactical asset allocation is essentially a market timing approach to portfolio management.

Accepted Answer

A) True 
 B)False

Question 9

In which stage of the life cycle can investors afford to take larger risks?

Accepted Answer

A)   Accumulation stage
B)   Consolidation stage
C)   Spending stage
D)   Gifting stage

Question 10

In considering inflation in a portfolio management context which of the following statements is true?

Accepted Answer

A)   An investment policy statement seldom contains statements about inflation-adjusted returns.
B)   Common stocks do not always provide an inflation hedge.
C)   At a 3 percent inflation rate the purchasing power of a dollar will double in less than 25 years.
D)   To preserve purchasing power investors ignore growth-oriented mix strategies.

Question 11

Pension funds are governed by the Prudent Man Rule since specific pension fund legislation has not been enacted by government.

Accepted Answer

A) True 
 B)False

Question 12

What are the two steps in the portfolio construction process?

Accepted Answer

(1) Define the universe of sec...

Question 13

Both institutional investors and individual investors have to consider taxes equally in making investment decisions.

Accepted Answer

A) True 
 B)False

Question 14

An efficient set of portfolios offers minimum risk for a given level of return.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is not a major constraint in the asset allocation process?

Accepted Answer

A)   liquidity
B)   taxes
C)   return requirements
D)   laws and regulations

Exam 21: Portfolio Management

Which of the following statements regarding inflation and investing is true?

Correct Answer
verified

In considering inflation in a portfolio management context which of the following statements is true?

Correct Answer
verified

Tactical asset allocation is essentially a market timing approach to portfolio management.

Correct Answer
verified

Which of the following is not a major constraint in the asset allocation process?

Correct Answer
verified

Both institutional investors and individual investors have to consider taxes equally in making investment decisions.

Correct Answer
verified

In which stage of the life cycle can investors afford to take larger risks?

Correct Answer
verified

An efficient set of portfolios offers minimum risk for a given level of return.

Correct Answer
verified

The two steps to establishing an investment policy are to state the:

Correct Answer
verified

How do the constraints for individual investors compare to those of institutional investors?

Correct Answer
verified
Individuals impose their own constraints...
View Answer

Pension funds are governed by the Prudent Man Rule since specific pension fund legislation has not been enacted by government.

Correct Answer
verified

Strategic asset allocation involves:

Correct Answer
verified

One aspect of the tax considerations in asset allocation is that:

Correct Answer
verified

Which of the following is not a usual constraint and preference considered in formulating an investment policy?

Correct Answer
verified

What are the two steps in the portfolio construction process?

Correct Answer
verified
(1) Define the universe of sec...
View Answer

Aggressive investors are more likely to have international stocks than conservative investors.

Correct Answer
verified

Exam 21: Portfolio Management

Which of the following statements regarding inflation and investing is true?

Correct AnswerverifiedShow Answer

In considering inflation in a portfolio management context which of the following statements is true?

Correct AnswerverifiedShow Answer

Tactical asset allocation is essentially a market timing approach to portfolio management.

Correct AnswerverifiedShow Answer

Which of the following is not a major constraint in the asset allocation process?

Correct AnswerverifiedShow Answer

Both institutional investors and individual investors have to consider taxes equally in making investment decisions.

Correct AnswerverifiedShow Answer

In which stage of the life cycle can investors afford to take larger risks?

Correct AnswerverifiedShow Answer

An efficient set of portfolios offers minimum risk for a given level of return.

Correct AnswerverifiedShow Answer

The two steps to establishing an investment policy are to state the:

Correct AnswerverifiedShow Answer

How do the constraints for individual investors compare to those of institutional investors?

Correct AnswerverifiedIndividuals impose their own constraints...View AnswerShow Answer

Pension funds are governed by the Prudent Man Rule since specific pension fund legislation has not been enacted by government.

Correct AnswerverifiedShow Answer

Strategic asset allocation involves:

Correct AnswerverifiedShow Answer

One aspect of the tax considerations in asset allocation is that:

Correct AnswerverifiedShow Answer

Which of the following is not a usual constraint and preference considered in formulating an investment policy?

Correct AnswerverifiedShow Answer

What are the two steps in the portfolio construction process?

Correct Answerverified(1) Define the universe of sec...View AnswerShow Answer

Aggressive investors are more likely to have international stocks than conservative investors.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Individuals impose their own constraints...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
(1) Define the universe of sec...
View Answer

Correct Answer
verified