Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

CIMA > Adaptive test 1 > Flashcards

Adaptive test 1 Flashcards

1
Q

CPPI eliminates what

A

exposure to risk assets, but this is not a hard floor

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Risk strategy that sets a hard sllor for downside protection

A

Buying Puts

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

How do you find approx. value of a property using the income approach

A

take net operating income / by cap rate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Cost of illiquid alternative investments versus liquid alts usually is what

A

higher

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Capitalization descriptors help investors understand what of an investment

A

Market value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Investor is reviewing free cash flow from equity models seeks dividends. Notices that a company pays dividends without free cash flow, it is likely coming from what

A

different source than net income or new debt

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

If the arithmetic mean and the median of data set are extremely far apart, an advisor can assume that the data are

A

skew toward the mean

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

A useful tool to review the movement of one variable to the movement of another variable in a data set is a

A

scatterplot

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

The core goal of attribution analysis is to determine the effectiveness and ability of

A

Fund managers and portfolios

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

A limitation of the Treynor ratio is that the ratio

A

ranks funds with similar risk the same

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Omegan Ratio defined

A

the probability-weighted ratio of gains versus losses for some threshold return target

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

can change the Omega ratio

A

investors risk tolerance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Sharpe ratio

A

The average return above the risk-free rate per unit of total risk

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Reward to variability

A

sharpe ratio

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

A limitation to Jensen’s alpha is that it is predicated on

A

one factor model

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

If a consultant adds enough securities to a portfolio, the consultant eventually will be left with exposure to which risk

A

interest rate risk

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

A consultant’s vendor firm rewards the consultant for business that has been directed their way with a family trip to Costa Rica

A

has the responsibility to disclose the trip to his clients

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

A consultant does not control policies of the firm. With regard to IWI’s Performance Reporting Standards, the consultant

A

must use best efforts and submit a written request for the firm to comply

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

When making comments to the media and general public, a consultant holding themself out with any IWI certification must

A

disclose beneficial compensation if relevant

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

If a consultant believes a situation could lead to a conflict of interest, the consultant should

A

notify firm in writing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

An ex-client of a consultant asks for assistance on a tax basis question that came up while a client of the consultant. The consultant should

A

Maintain professionalism and offer information that is allowable by the consultant’s firm.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Consultants must disclose fully to clients

A

services provided and compensation received

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Additional compensation and benefits from third parties must be disclosed to

A

employers in advance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Returns reported by IWI members should be computed and communicated in compliance with

A

The IWI Performance Reporting Guidelines

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

According to margin lending guidelines, when the value of an equity falls below the maintenance margin, an investor may be required to

A

deposit funds into the portfolio

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Investors who need to fund a series of future expenses should engage in

A

cash flow matching

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

A client’s current financial position can be used to analyze

A

potential estate issues

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Foundations usually are bound by the dual mandate of

A

Spending and growth

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

In the allocation of assets, after making capital market assumptions, a manager should

A

identify candidate portfolios

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Risk tolerance is an investors

A

willingness and ability to take risk

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

The tenet of buying low and selling high is reflected in the asset allocation strategy of

A

constant mix

32
Q

The IPS monitoring goals of the client in the IPS are usually

A

clearly outlined and at regular intervals

33
Q

UPAIA helps trustees balance the need for

A

Creating income and preserving principal

34
Q

The UPMIFA covers

A

spending when endowments are considered underwater

35
Q

IPS reviews should be reviewed

A

annually and when directed by clients.

36
Q

What should not be included in IPS

A

Specific investments

37
Q

All investors should be profiled

A

individually

38
Q

UPIA introducted what

A

Delegation of management strategies.

39
Q

With institutional clients, a unique element to the IPS is that the benchmark may be:

A

linked to a liability

40
Q

UPAIA was designed to carry out the wishes of the

A

Trust creator

41
Q

UPMIFA addresses the need to what

A

preserve purchasing power of the principal

42
Q

Liability policies inside of the IPS frequently address the constraint of

A

liquidity

43
Q

For endowments that have spending policies, the spending policy should be thought of as

A

a rule to follow in the IPS

44
Q

A trustee’s ability to add derivatives as a portfolio option in an IPS is due to

A

UPIA

45
Q

A consultant believes greenhouse emissions will lead to imminent changes in a foreign government that can have far-reaching consequences. This risk is best categorized as a

A

Macro risk

46
Q

Example of Maco risk

A

Governmental

47
Q

Absolute strategies diversify out what

A

beta and allow investors to focus on manager alpha

48
Q

A consultant using volatility as a primary basis for allocation decisions is utilizing

A

Risk parity strategies

49
Q

An investor believes Treynor ratios should be the basis of asset allocation decisions. The strategy can be best described as

A

Risk based

50
Q

A consultant is determining the effect of adding a specific asset to a portfolio. The consultant concludes that adding this asset would not be prudent for a specific client. The consultant’s process is most likely

A

risk based

51
Q

An investor believes that passive strategies are best suited for a portfolio. When it comes to asset allocation, this investor should use

A

strategic asset allocation or buy and hold

52
Q

Investors may use collars when they believe

A

The downside risk is great and they are willing to give up upside gain

53
Q

A consultant advises clients to adjust portfolio targets for short periods to capitalize on recently presented economic data. The strategy intends to revert to original allocations once the opportunity disappears. This asset allocation strategy is:

A

tactical

54
Q

A collar strategy can be effective for investor who want to what

A

reduce the cost of their downside protection

55
Q

A decrease in ratings can lead to

A

higher borrowing costs

56
Q

Commodity hedges can address

A

political and regulatory changes, seasonal variations, weather, technology, and market conditions

57
Q

An investor buys a protective put and simultaneously the stock the investor owns drops. When selling the put, this investor is

A

Subject to capital gains.

58
Q

Merger arbitrage strategies are considered to be

A

risk based

59
Q

commodity risk is the only relevant risk when

A

during production

60
Q

Traditional asset allocation strategies are based primarily on the tenets of

A

MPT

61
Q

Treasury STRIPS would not avoid

A

interest rate risk

62
Q

An investor speculating on the direction of interest rates may want to hedge a portfolio using

A

swaps

63
Q

Risk budgeting usually is accomplished using

A

passive investments

64
Q

Rising domestic currencies require a

A

hedge for international holdings

65
Q

Example of non diversifiable risk

A

interest rate risk

66
Q

Regression based analysis for performance evaluation involves attribution based on

A

CAPM

67
Q

An investor reviewing a sample population data set would want to observe

A

small standard errors

68
Q

Economists studying forces that drive price levels within segments of the economy study all of the following, except:

A

Net exports

69
Q

investments are appropriate for early cycle investing

A

consumer discretionary

70
Q

Home country bias can lead investors to

A

Miscalulate risk and return in the capital markets

71
Q

A consultant using volatility as a primary basis for allocation decisions is utilizing:

A

risk parity strategies

72
Q

Duration has an indirect relationship with

A

interest rates

73
Q

The smaller the standard error

A

the more favorable that the sample represents the population

74
Q

Shareholder equity can be found on a

A

balance sheet

75
Q
A

CIMA (22 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions