Portfolio Management And Investment Risk Flashcards
Which type of risk includes current events, consumer confidence, and the general political climate?
Market risk
True or false: dollar cost average and reduce his timing risk involved on markets?
True
Dollar cost average and guarantees a profit on bonds when they’re sold?
False
True or false: TIPS automatically add the inflation rate each year in addition to the coupon rate?
True
A ___________ _________ is used to determine present value.
A discounting formula
TIPS are offered in what maturities
5, 10, and 30 years.
True or false: CAPM is used to compare expected rates of return
True
Define CAPM
A model that attempts to describe the relationship between risk and expected return for securities
True or false: a stop order may be described as a suspended market order
True
A change in _________ __________ would most likely have the greatest impact on a bond in the first year of the investment.
Interest Rates
Why would interest rates affect a bond in the first year of the investment?
It could dramatically change the bonds price
Commodities are ahead you can see what type of risk?
Inflation
It’s an analyst wants to measure the degree to which a company or partnership is leveraged he would calculate the:
Debt to capital ratio, which is debt/total capital
True or false: In a solicitors disclosure document the amount paid to the solicitor must be disclosed
True
True or false: Indexing is a passive portfolio management strategy
True
What is the criteria to be defined as “a securities portfolio”?
Securities portfolio is made up of at least 50% securities. Of which cash and cash equivalents are also considered securities.
Are cash and cash equivalents considered securities?
Yes
The internal rate of return assumes all cash flows are invested at the_____________.
Internal rate of return
The ______________ is the rate that makes the discounted value of cash inflows and outflows equal to zero.
Internal rate of return
If an investor is choosing between two investments one you should choose the one with the ___________ IRR.
Higher
If a customer is willing to assume market risk, the best course of action is to eliminate _____________ risk.
Unsystematic
Buy-and-hold and systematic rebalancing her examples of passive approach is to hospital location based on the theory known as:
Efficient market hypothesis
True or false: beta is not a measure used for fixed income portfolios
True
When trading on margin clients are required to deposit 50% of the ___________ value of the security
Market
T or F: The internal rate of return is the most appropriate method used to determine the probability of a project.
True
Modern portfolio theory defines risk as:
Variability of expected returns about the mean
