Quiz
Chapter 7
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Fragen in diesem Quiz (16)
1Portfolio performance is:
- Ararely measured in absolute terms, mostly measured in relative terms
- Brarely measured in relative terms, mostly measured in absolute terms
- Conly ever measured in relative terms
- Donly ever measured in absolute terms
2Which of the following is a limitation rather than an assumption of the Capital Asset Pricing
Model?- AInvestors are rational and risk averse
- BInvestors hold a well-diversified portfolio
- CInvestors make investment decisions based on mean variance analysis
- DInvestors are rewarded for more than just their exposure to systemic risk
3An investor allowed the principle of 'regret aversion' to influence his actions. This resulted in
him:- Adeclining to buy a stock based purely on a previous bad experience
- BB buying a badly performing stock from a friend as recompense for recommending it in the
first place - Cholding a poorly performing stock for an irrationally long period
- Donly selling stock once a specified loss threshold had been reached
4Why is a time weighted return (TWR) preferred to a money weighted return (MWR) when
evaluating performance?- ATWR only requires portfolio values at the start and end of the investment period along
with dates and size of each cash flow - BTWR eliminates the timing effect of cash flows into and out of the fund
- CTWR measures the fund growth resulting from both the underlying performance of the
portfolio and the size and timing of cash flows into and out of the fund - DTWR calculates the risk adjusted return per unit of risk
- ATWR only requires portfolio values at the start and end of the investment period along
5Four bond portfolios each hold a variety of stock. Which one of them is BEST described as
operating a barbell strategy?- APortfolio A, which consists solely of bills maturing in one year plus bonds maturing in 25
and 30 years - BPortfolio B, which consists solely of bills maturing in six months plus bonds maturing in 5,
10, 15 and 20 years - CPortfolio C, which consists solely of bonds maturing in 1, 3 and 5 years
- DPortfolio D, which consists solely of bonds maturing in 20, 25 and 30 years
- APortfolio A, which consists solely of bills maturing in one year plus bonds maturing in 25
6Why do portfolios need a regular annual or periodic review?
- ATo ensure that all assets are priced on a regular basis
- BTo ensure that all assets are reconciled against the market
- CTo ensure that all cash balances are reconciled against the actual bank
- DTo ensure the portfolio still meets the client's objectives and is positioned correctly given
the market conditions
7The excess return of a portfolio or security above that of the risk adjusted benchmark is known
as:- Aalpha
- Bbeta
- Cduration
- Dpremium
8An investment manager believes that markets are inefficient and that he can obtain abnormal
returns after transaction charges. Which investment style is he most likely to adopt?- APassive
- BIndexation
- CActive
- DSatellite
9An individual has been advised to invest in some shares by a friend. He wants to make sure that
he invests in companies which do not have a volatile share price. To achieve this he should
select shares which have a beta factor of:- A1
- B1.25
- C1.5
- D1.75
10Which of the following is a feature in Arbitrage Pricing Theory (APT)?
- AAPT relies on identified factors being correlated
- BThe variables of APT include real economic factors
- CThe principal component of APT is the return on an index of all shares
- DAPT is equivalent to a single factor Capital Asset Pricing Model
11Based on the principles of Modern Portfolio theory, an equity fund will operate on the
'efficient frontier' if:- Athe optimum level of systematic risk is obtained
- Bthe best level of diversification is achieved
- Cthe fund's alpha value is negative
- Dthe fund's beta value is one or more
12Bond portfolio X exclusively contains relatively long-dated stock whereas Bond portfolio Y
operates a laddering strategy. This means that Bond X is likely to:- Agenerate higher yields
- Bpresent less of a credit risk
- Cbe more sensitive to interest rate changes
- Drepresent a more diversified approach
13In which country can shareholders be assured that listed companies will comply with the OECD
Principles for Corporate Governance?- AFrance
- BGermany
- CUK
- DUSA
14An investor has a requirement for an 8% return and is considering choosing Stock X to satisfy
this need. Based on the Capital Asset Pricing Model, if the beta value of this stock is
recalibrated from 1.2 to 1.3, this would:- Aincrease the likelihood that the stock would be suitable
- Bdecrease the likelihood that the stock would be suitable
- Cautomatically trigger an increase in the investor's required rate
- Dautomatically trigger a decrease in the investor's required rate
15Using Modern Portfolio Theory to create a two stock portfolio, which of the following is TRUE?
- AThe lower the correlation of stock returns, the greater the portfolio's diversification
- BThe higher the correlation of stock returns, the greater the portfolio's diversification
- CThe higher the correlation of stock returns, the lower the level of total risk associated with
any given level of expected return - DThe lower the correlation of stock returns, the higher the level of total risk associated with
any given level of expected return
16Which of the following does a passive investment manager principally invest in?
- AEquities
- BAn index
- CFixed income
- DOther institutional funds
Informationen
- Beschreibung
- Der Nutzer hat seine Fachbereichs-Information gelöscht. Quiz am Chapter 7, erstellt von Gelöschter Nutzer am 03/09/2021.
- Autor
- Gelöschter Nutzer
- Sprache
- English
- Aufrufe
- 38
- Verlauf
- Erstellt am 3 Sep 2021 · aktualisiert am 17 Sep 2021
- Schlagwörter