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Chapter 7

Deleted user 16 questions

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Questions in this quiz (16)

  1. 1Portfolio performance is:
    1. Ararely measured in absolute terms, mostly measured in relative terms
    2. Brarely measured in relative terms, mostly measured in absolute terms
    3. Conly ever measured in relative terms
    4. Donly ever measured in absolute terms
  2. 2Which of the following is a limitation rather than an assumption of the Capital Asset Pricing
    Model?
    1. AInvestors are rational and risk averse
    2. BInvestors hold a well-diversified portfolio
    3. CInvestors make investment decisions based on mean variance analysis
    4. DInvestors are rewarded for more than just their exposure to systemic risk
  3. 3An investor allowed the principle of 'regret aversion' to influence his actions. This resulted in
    him:
    1. Adeclining to buy a stock based purely on a previous bad experience
    2. BB buying a badly performing stock from a friend as recompense for recommending it in the
      first place
    3. Cholding a poorly performing stock for an irrationally long period
    4. Donly selling stock once a specified loss threshold had been reached
  4. 4Why is a time weighted return (TWR) preferred to a money weighted return (MWR) when
    evaluating performance?
    1. ATWR only requires portfolio values at the start and end of the investment period along
      with dates and size of each cash flow
    2. BTWR eliminates the timing effect of cash flows into and out of the fund
    3. 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
    4. DTWR calculates the risk adjusted return per unit of risk
  5. 5Four bond portfolios each hold a variety of stock. Which one of them is BEST described as
    operating a barbell strategy?
    1. APortfolio A, which consists solely of bills maturing in one year plus bonds maturing in 25
      and 30 years
    2. BPortfolio B, which consists solely of bills maturing in six months plus bonds maturing in 5,
      10, 15 and 20 years
    3. CPortfolio C, which consists solely of bonds maturing in 1, 3 and 5 years
    4. DPortfolio D, which consists solely of bonds maturing in 20, 25 and 30 years
  6. 6Why do portfolios need a regular annual or periodic review?
    1. ATo ensure that all assets are priced on a regular basis
    2. BTo ensure that all assets are reconciled against the market
    3. CTo ensure that all cash balances are reconciled against the actual bank
    4. DTo ensure the portfolio still meets the client's objectives and is positioned correctly given
      the market conditions
  7. 7The excess return of a portfolio or security above that of the risk adjusted benchmark is known
    as:
    1. Aalpha
    2. Bbeta
    3. Cduration
    4. Dpremium
  8. 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?
    1. APassive
    2. BIndexation
    3. CActive
    4. DSatellite
  9. 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:
    1. A1
    2. B1.25
    3. C1.5
    4. D1.75
  10. 10Which of the following is a feature in Arbitrage Pricing Theory (APT)?
    1. AAPT relies on identified factors being correlated
    2. BThe variables of APT include real economic factors
    3. CThe principal component of APT is the return on an index of all shares
    4. DAPT is equivalent to a single factor Capital Asset Pricing Model

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User has deleted their subject information Quiz on Chapter 7, created by Deleted user on 03/09/2021.
Author
Deleted user
Language
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