problem 1: In an investment policy statement of the objectives of an investor are expressed in terms of:
a) Risk and return.
d) Time horizon.
e) Liquidity needs.
problem 2: Which of the given is not a step in the portfolio management process?
a) Develop a policy statement.
b) Study current financial and economic conditions.
c) Construct the portfolio.
d) Monitor investor's requirements and market conditions.
e) Sell all assets and reinvestment proceeds at least once a year.
problem 3: The first step in the investment process is the development of a(n):
a) Objective statement.
b) Policy statement.
c) Financial statement.
d) Statement of cash needs.
e) Statement of cash flows.
problem 4: Which of the given is not considered to be an investment objective?
a) Capital preservation.
b) Capital appreciation.
c) Current income.
d) Total return.
e) None of the above.
problem 5: ____ refer(s) to the ability to convert assets to cash quickly and at a fair market price and often increase(s) as one approach the later phases of the investment life cycle.
a) Liquidity needs.
b) Time horizons.
c) Liquidation values.
d) Liquidation essentials.
e) Capital liquidations.
problem 6: The policy statement might comprise a ____ against that a portfolio's or portfolio manager's performance can be measured.
d) Reference point.
e) Market pair.
problem 7: Asset allocation is:
a) The process of dividing funds into asset classes.
b) Concerned with returns variability.
c) Concerned with the risk associated with different assets.
d) Concerned with the relationship among investment’s returns.
e) All of the above.
problem 8: Research has shown that the asset allocation decision describes ____% of the variation in fund returns across all funds and ____% of the variation in returns for a specific fund over time.
a) 90 and 100.
b) 100 and 40.
c) 90 and 40.
d) 40 and 100.
e) 40 and 90.
problem 9: Once the portfolio is constructed, it should be continuously:
problem 10: Which of the given statements is false?
a) Unrealized capital gains are taxable.
b) Realized capital gains are taxable.
c) Tax-exempt investments are attractive to individuals with high tax liabilities.
d) Returns comparisons should be made on an equivalent tax basis.
e) Tax exempt investors prefer tax exempt investments.