Chapter 16: Investors And Their Needs

Question 1

A private company that manages the financial affairs of one or more members of a family or of multiple families

Answer 1

Family office

Question 2

Hold investment portfolios for the benefit of future and current retired members, who are called beneficiaries.

Answer 2

Pension Plans

Question 3

Pension plan that promises a defined annual amount to their retired members. Defined amount typically varies by member based on such factors as years of service and annual compensation while employed. Typically, employees do not have the right to receive benefits until they have worked for the company or government for a period specified by the pension plan.

Answer 3

Defined benefit pension plans

Question 4

The pension sponsor typically contributes an agreed on amount to an account set up for each employee. Employees also generally contribute to their own retirement plan accounts, usually through employee payroll deductions.

Answer 4

Defined contribution pension plan

Question 5

Long-term funds of nonprofit institutions, such as universities, colleges, schools, museums, theaters, opera companies, hospitals, and clinics.

Answer 5

Endowment funds

Question 6

Grant making institutions funded by gifts and by the investment income that they produce. Most do not directly provide services. Instead, they fund organizations that provide services and such areas as the arts or charities.

Answer 6

Foundations

Question 7

Governments have created _____ to invest surpluses for the benefit of current and future generations of their citizens.

Answer 7

Sovereign wealth funds

Question 8

It is good practice to capture information about the client and the clients needs in an _____. This serves as a guide for the investor and investment manager or advisor regarding what is required of and acceptable in the investment portfolio.

Answer 8

Investment policy statement (IPS)