4576 - ch22 Latian Di Kelas - Please Print
4576 - ch22 Latian Di Kelas - Please Print
4576 - ch22 Latian Di Kelas - Please Print
1. The first step any investor should take before beginning to invest is to __________.
2. If an investor wants to invest 100% of her portfolio in safe assets but does not want to
manage her portfolio, she should invest in __________.
4. Life insurance companies try to hedge the risks inherent in whole-life insurance policies
by investing in __________.
A. long-term bonds
B. money market mutual funds
C. savings accounts
D. short-term commercial paper
A. greedier
B. less interested in investments
C. more risk averse
D. more risk tolerant
6. Of the following, the investment time horizon is typically the shortest for __________.
A. banks
B. endowment funds
C. life insurance companies
D. pension funds
Ch22
Practice
please
print
I. Return requirements
II. Risk tolerance
III. Time horizon
A. I only
B. I and II only
C. II and III only
D. I, II, and III
10. An investor has a long time horizon and desires to earn the market rate of return.
However, the investor will need to withdraw funds each year from her investment
portfolio. The biggest constraint a planner would face with this client is a ___________
constraint.
A. tax
B. risk-tolerance
C. liquidity
D. social
11. When used in the context of investment decision making, the term liquidity refers to ___.
A. the ease and speed with which an asset can be sold at any value possible
B. the ease and speed with which an asset can be sold without having to discount the value
C. an aspect of monetary policy
D. the proportion of short-term to long-term investments held in an investor's portfolio
Ch22
Practice
please
print
13. Conservative investors are likely to want to invest in __________ mutual funds, while risk-
tolerant investors are likely to want to invest in __________.
14. Which of the following is the least likely to be included in the portfolio management
process?
15. A clearly understood investment policy statement is not critical for which one of the
following?
I. Mutual funds
II. Individuals
III. Defined benefit pension funds
A. II only
B. III only
C. I only
D. None of these options (A policy statement is necessary for all three.)
16. A life insurance firm wants to minimize its interest rate risk, and it is planning on paying
out $250,000 in 5 years. Which one of the following investments best matches its goal?
17. An investor with high risk aversion will likely prefer which of the following risk and return
combinations?
18. Your sister, an avid outdoors person, works in the airline industry, and she has come to
you (the financial guru) for investment advice. She is looking into purchasing stocks she
knows something about. She is considering purchasing stock in Boeing, Lockheed Martin,
United Technologies (maker of aircraft engines), and Cabela's Sporting Goods. Based
only on the information given, which stock should you recommend for her?
A. Boeing
B. Lockheed Martin
C. United Technologies
D. Cabela's
20. For an investor concerned with maximizing liquidity, which of the following investments
should be avoided?
A. Real estate
B. Bonds
C. Domestic stocks
D. International stocks
21. A portfolio consists of three index funds: an equity index, a bond index, and an
international index. The portfolio manager changes the weights periodically according to
forecasts for each sector. This is an example of __________.