Portfolio Management And Investment Risk

Question 1

Which type of risk includes current events, consumer confidence, and the general political climate?

Answer 1

Market risk

Question 2

True or false: dollar cost average and reduce his timing risk involved on markets?

Answer 2

True

Question 3

Dollar cost average and guarantees a profit on bonds when they’re sold?

Answer 3

False

Question 4

True or false: TIPS automatically add the inflation rate each year in addition to the coupon rate?

Answer 4

True

Question 5

A ___________ _________ is used to determine present value.

Answer 5

A discounting formula

Question 6

TIPS are offered in what maturities

Answer 6

5, 10, and 30 years.

Question 7

True or false: CAPM is used to compare expected rates of return

Answer 7

True

Question 8

Define CAPM

Answer 8

A model that attempts to describe the relationship between risk and expected return for securities

Question 9

True or false: a stop order may be described as a suspended market order

Answer 9

True

Question 10

A change in _________ __________ would most likely have the greatest impact on a bond in the first year of the investment.

Answer 10

Interest Rates

Question 11

Why would interest rates affect a bond in the first year of the investment?

Answer 11

It could dramatically change the bonds price

Question 12

Commodities are ahead you can see what type of risk?

Answer 12

Inflation

Question 13

It’s an analyst wants to measure the degree to which a company or partnership is leveraged he would calculate the:

Answer 13

Debt to capital ratio, which is debt/total capital

Question 14

True or false: In a solicitors disclosure document the amount paid to the solicitor must be disclosed

Answer 14

True

Question 15

True or false: Indexing is a passive portfolio management strategy

Answer 15

True

Question 16

What is the criteria to be defined as “a securities portfolio”?

Answer 16

Securities portfolio is made up of at least 50% securities. Of which cash and cash equivalents are also considered securities.

Question 17

Are cash and cash equivalents considered securities?

Answer 17

Yes

Question 18

The internal rate of return assumes all cash flows are invested at the_____________.

Answer 18

Internal rate of return

Question 19

The ______________ is the rate that makes the discounted value of cash inflows and outflows equal to zero.

Answer 19

Internal rate of return

Question 20

If an investor is choosing between two investments one you should choose the one with the ___________ IRR.

Answer 20

Higher

Question 21

If a customer is willing to assume market risk, the best course of action is to eliminate _____________ risk.

Answer 21

Unsystematic

Question 22

Buy-and-hold and systematic rebalancing her examples of passive approach is to hospital location based on the theory known as:

Answer 22

Efficient market hypothesis

Question 23

True or false: beta is not a measure used for fixed income portfolios

Answer 23

True

Question 24

When trading on margin clients are required to deposit 50% of the ___________ value of the security

Answer 24

Market

Question 25

T or F: The internal rate of return is the most appropriate method used to determine the probability of a project.

Answer 25

True

Question 26

Modern portfolio theory defines risk as:

Answer 26

Variability of expected returns about the mean