Portfolio Management MCQ - Portfolio Management Section 2

26 A portfolio manager decides to allot a certain percentage of portfolio, each to different asset classes in order to achieve the client' long term goals. This decision is most likely an example of:

After having determined the investor objectives and constraints, a strategic asset allocation is developed which specifies the percentage allocations to the included asset classes.

27 Patrick Dempsey, a portfolio manager, decides to temporarily invest more of a portfolio in equities than stated in the investment policy statement because he believes that equities are currently underpriced. This decision is most likely an example of:

Tactical asset allocation is the decision to deliberately deviate from the policy exposures to systematic risk factors with the intent to add value based on forecasts of the near-term returns of those asset classes.

28 Sirajuddin Sheikh invests the majority of his portfolio on a passive risk strategy while managing a minority of the assets aggressively in smaller portfolios. This approach is best described as:

The core–satellite approach to constructing portfolios is defined as “investing the majority of the portfolio on a passive or low active risk basis while a minority of the assets is managed aggressively in smaller portfolios.”

29 Which section of the investment policy statement (IPS) most likely contains the information related to strategic asset allocation and portfolio rebalancing policy?

Information related to strategic asset allocation and portfolio rebalancing policy would be placed in the appendices of an investment policy statement.

30 Which of the following factors is least likely to impact the risk-taking ability of a client?

An individual‟s ability to take risk is impacted by such factors as time horizon and expected income. Personality type is most likely to impact an individual‟s willingness to take risk.