Chapter 16 The Portfolio Management Process KT

Question 1

A ratio measure of the portfolio’s risk-adjusted rate of return using standard deviation as the measure of risk.

Answer 1

Sharpe ratio

Question 2

The agreement between a portfolio manager and a client that provides the guidelines for the manager.

Answer 2

investment policy statement

Question 3

An asset allocation strategy that involves adjusting a portfolio to take advantage of perceived inefficiencies in the prices of securities.

Answer 3

tactical asset allocation

Question 4

An asset allocation strategy of systematic rebalancing of the securities in the portfolio so that they match the long-term strategic asset mix.

Answer 4

dynamic asset allocation

Question 5

Apportioning investment funds among different categories of assets, such as cash, fixed income securities and equities.

Answer 5

asset allocation

Question 6

The portfolio’s consistent long-term asset mix.

Answer 6

strategic asset allocation