Portfolio Management

1. The goal of an efficient portfolio is to ________.

Answer: D

• achieve a predetermined rate of return for a given level of risk

• maximize risk in order to maximize profit

• minimize profit in order to minimize risk

• minimize risk for a given level of return

Perfectly ________ correlated series move exactly together and have a correlation coefficient of ________, while perfectly ________ correlated series move exactly in opposite directions and have a correlation coefficient of ________.

• negatively; -1; positively; +1

• negatively; +1; positively; -1

• positively; -1; negatively; +1

• positively; +1; negatively; -1

Combining negatively correlated assets having the same expected return results in a portfolio with ________ level of expected return and ________ level of risk.

• a higher; a lower

• the same; a higher

• the same; a lower

• a lower; a higher

Small Capitalization refers to findings more opportunities to add value through research as less widely followed by institutional investors

• True

• False

The portfolio management process includes

• Developing an Investment Policy Statement

• Devising Investment Strategy

• Construct an investment portfolio

• monitor and review asset allocation

• all above