Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

CFMP > Identification: Portfolio Management > Flashcards

Identification: Portfolio Management Flashcards

1
Q

refers to a collection of investment tools such as stocks, shares, mutual funds, bonds, cash and so on depending on the investor’s income, budget, and convenient time frame.

A

Portfolio

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

refers to the various assets of an investor which are to be considered as a unit.

A

Investment porfolio

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

The art and science of making decision about investment mix and policy, matching investments to objectives, asset allocation for individuals and institutions, and balancing risk vs. performance.

A

Portfolio Management

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Security not only involves keeping the principal sum intact but also keeping intact its purchasing power intact.

A

Security/Safety of Principal

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

To facilitate planning more accurately and systematically the reinvestment consumption of income is important.

A

Consistency of returns

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Guarantees the growth of capital by reinvesting in growth securities or by the purchase of the growth securities.

A

Capital growth

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

It is the case of which a security can be bought or sold

A

Marketability

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

It is desirable to investor so as to take advantage of attractive opportunities upcoming in the market

A

Liquidity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

The basic objective of building a portfolio is to reduce risk of loss of capital and/or income by investing in various types of securities and over a wide range of industries

A

Diversification of portfolio

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

The portfolio manager needs to evaluate the client’s portfolio from time to time and revise the ratio of investment in different assets (volatile and stable assets) to avail of high value

A

Rebalancing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

the combination of volatile and non-volatile assets in which an investor is willing to invest

A

Asset allocation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

requires a high level of expertise about the markets

A

Active Portfolio Management

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Aims to generate better market returns than the market

A

Active portfolio management

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

it requires a constant evaluation of the market to buy assets when they are undervalued and sell them when they exceed the norm

A

Active portfolio management

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

isn’t concerned with beating the market because its proponents subscribe to the efficient market hypothesis

A

Passive portfolio mgt

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Believe that fundamentals will always be reflected in the value of the underlying asset (investors who seek to minimize risk often prefer

A

Passive portfolio management/passive strategy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

the portfolio manager can merely advise the client what is good and bad for him, but the client reserves full right to take his own decisions

A

Non-discretionary

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

They will give you the pros and cons of investing in a particular market or strategy but won’t execute it without your permission

A

Non-discretionary

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Is an integrated compilation of steps implemented in a consistent way to create and manage a suitable portfolio of assets to achieve client’s specified goals.

A

Portfolio Management Process

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Get to know the client’s goals. The first thing a portfolio manager will do when taking on a new client is to gain an understanding of that client’s goals

A

Planning

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

the investment policy statement and the capital market expectations are combined to determine the long-term weights of the target asset classes

A

Strategic asset allocation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

any short-term changes in the portfolio strategy as a result of the change in circumstances of the investor or the market expectations is

A

Tactical asset allocation

21
Q

Construct the portfolio. The manager integrates investment strategies with capital market expectations to select the specific assets for the portfolio (the portfolio selection/composition decision)

A

Execution

22
Q

the expectation of the capital markets is combined with decided investment allocation strategy to choose specific assets for the investor’s portfolio

A

Portfolio selection

23
Q

once the portfolio composition is finalized, the portfolio is executed

A

Portfolio implementation

24
Q

Monitor and evaluate the portfolio’s performance. Once the manager has put the plan into action, they’ll continue to keep an eye on its progress. This step also includes any rebalancing that the manager does down the road.

A

Feedback

25
Q

the portfolio manager needs to monitor and evaluate risk exposures of the portfolio and compares it with the strategic asset allocation

A

Monitoring and rebalancing

26
Q

the investment performance of the portfolio must be evaluated regularly to measure the achievement of objectives and the skill of the portfolio manager

A

Performance evaluation

27
Q

The process of selling certain issues in portfolio and purchasing new ones to replace them

A

Portfolio Revision

28
Q

Involves determining periodically how the portfolio performed in terms of not only the return earned, but also the risk experienced by the investor

A

Portfolio performance evaluation

29
Q

is a process encompassing many activities of investment in assets and securities. It is a crucial component in investing. It is a dynamic and flexible concept and involves regular and systematic analysis, judgment and action.

A

Portfolio Management

30
Q

Does no trade on an exchange

A

Mutual fund

31
Q

Traded on an exchange

A

ETF - Exchange Traded Funds

32
Q

Based on NAV at the end of the day

A

Mutual fund (Net Asset Value)

33
Q

Determined throughout the day by buyers and sellers on the exchange

A

ETF

34
Q

Pooled funds from high-net-worth clients

Cannot be sold to the general public

Has fewer reporting requirements as compared to mutual funds

Different from hedging

A

Hedge Funds

35
Q

The new approach to investing

A

Modern Portfolio Theory

36
Q

Developed by Harry Markowitz in 1952

Incorporates risk management into security selection

Considers the trade-off between risk and return

A

Modern Portfolio Theory

37
Q

Degree of risk aversion = Degree of required return per level or risk

A
38
Q

A risk that affects the entire financial market

Cannot be diversified away

A

Systemic risk

39
Q

A risk that only affects a certain company or industry

A

Nonsystematic risk

40
Q

Risk Capacity + Risk Attitude = Risk Tolerance

A
41
Q

Net Worth
= Assets - Liabilities

A
42
Q

P/E of stock is higher vs. benchmark – Overvalued

A
43
Q

P/E of stock is lower vs. benchmark – Undervalued

A
44
Q

requires strategically buying and selling stocks and other assets in an effort to beat the performance of the broader market.

A
  • Active portfolio management
45
Q

seeks to match the returns of the market by mimicking the makeup of an index or indexes.

A
  • Passive portfolio management
46
Q

requires clear long-term goals, clarity from the IRS on tax legislation changes, understanding of investor risk tolerance, and a willingness to study investment options.

A
  • Portfolio management
47
Q

Closed-end funds are generally actively managed

A
48
Q

Those who build indexed portfolios may use modern portfolio theory (MPT) to help them optimize the mix.

A
49
Q

Another word for passive management

A

Index investing

50
Q

also referred to as index fund management, aims to duplicate the return of a particular market index or benchmark.

A

passive portfolio management

51
Q

is based on the understanding that different types of assets do not move in concert, and some are more volatile than others. A mix of assets provides balance and protects against risk.

A

Asset allocation

52
Q

is used to return a portfolio to its original target allocation at regular intervals, usually annually. This is done to reinstate the original asset mix when the movements of the markets force it out of kilter

A

Rebalancing

CFMP (5 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions