Question 1

Which type of fund is sometimes called an alternative investment?

Accepted Answer

A)  exchange-traded fund 
B)  hedge fund 
C)  specialist fund 
D)  infrastructure fund 
A)  exchange-traded fund 
B)  hedge fund 
C)  specialist fund 
D)  infrastructure fund

Question 2

An approach to the management of bond portfolios involves choosing portfolios with a duration that matches the duration of liability cash flows.

Accepted Answer

A) True 
 B)False

Question 3

A bond where the principal is amortised over the life of the security,and cash flows include both principal and interest,is known as an 'amortising bond'.

Accepted Answer

A) True 
 B)False

Question 4

__________ involves knowledge of the factors influencing interest rates.

Accepted Answer

A)  Security selection 
B)  Market timing 
C)  Riding the yield curve 
D)  all of these choices 
A)  Security selection 
B)  Market timing 
C)  Riding the yield curve 
D)  all of these choices

Question 5

Portfolio insurance allows an investor to set a floor on the value of a portfolio.The underlying portfolio is hedged against a fall in value below the floor by setting up an offsetting portfolio of a call option.

Accepted Answer

A) True 
 B)False

Question 6

Contingent immunisation is an example of strategies.

Accepted Answer

A)  Active 
B)  passive 
C)  Mixed 
D)  None of the above 
A)  Active 
B)  passive 
C)  Mixed 
D)  None of the above

Question 7

Interest rate anticipation is a bond _____________ approach and this requires second guessing the market and positioning the portfolio ____________ return.

Accepted Answer

A)  portfolio; to minimise 
B)  market; investment 
C)  management; to maximise, 
D)  swapping; to improve 
A)  portfolio; to minimise 
B)  market; investment 
C)  management; to maximise, 
D)  swapping; to improve

Question 8

A major disadvantage of passive over active portfolio management strategies is the minimisation of transactions costs.

Accepted Answer

A) True 
 B)False

Question 9

__________ involves purchasing a portfolio of bonds that produce cash flows matching closely those cash flows of the underlying liability.

Accepted Answer

A)  Cash matching 
B)  Immunisation 
C)  Hedging 
D)  none of these choices 
A)  Cash matching 
B)  Immunisation 
C)  Hedging 
D)  none of these choices

Question 10

Surveys by Benson and Pope 1993 reveal the limited use of _________________;they also find that most funds employ _____________________,believing that they have superior skills in stock picking.

Accepted Answer

A)  passive management; fund managers 
B)  fundamental analysis; passive asset allocation 
C)  technical analysis; active stock selection 
D)  market timing; active stock selection 
A)  passive management; fund managers 
B)  fundamental analysis; passive asset allocation 
C)  technical analysis; active stock selection 
D)  market timing; active stock selection

Question 11

To construct a beta mimicking portfolio,a portfolio is constructed that has:

Accepted Answer

A)  a return equal to the risk-free rate 
B)  a beta of zero 
C)  a beta of one 
D)  identical variance to the market portfolic 
A)  a return equal to the risk-free rate 
B)  a beta of zero 
C)  a beta of one 
D)  identical variance to the market portfolic

Question 12

Reilly,Kao and Wright (1992)find that the major bond market indices in the USA have a correlation coefficient ranging from

Accepted Answer

A)  $ 0.2 $ 
B)  $ 0.4 $ 
C)  $ 0.6 $ 
D)  $ 0.9 $ 
A)  $ 0.2 $ 
B)  $ 0.4 $ 
C)  $ 0.6 $ 
D)  $ 0.9 $

Question 13

A common example of cash-flow matching is:

Accepted Answer

A)  using current revenue to pay current debts 
B)  only buying investments, using cash available without borrowing 
C)  legal defeasance 
D)  none of these choices 
A)  using current revenue to pay current debts 
B)  only buying investments, using cash available without borrowing 
C)  legal defeasance 
D)  none of these choices

Question 14

Funds that set aside money during the working lives of people to cater for their financial needs during retirement are called:

Accepted Answer

A)  unit trusts 
B)  superannuation funds 
C)  life office funds 
D)  individual funds 
A)  unit trusts 
B)  superannuation funds 
C)  life office funds 
D)  individual funds

Question 15

__________ requires an investor to identify bonds with superior returns and similar characteristics to existing bonds,and to liquidate current bonds and purchase higher yielding bonds.

Accepted Answer

A)  Security selection 
B)  Market timing 
C)  Riding the yield curve 
D)  Bond swapping 
A)  Security selection 
B)  Market timing 
C)  Riding the yield curve 
D)  Bond swapping

Question 16

Which type of fund can typically be accessed through private placement,where a minimum subscription is required?

Accepted Answer

A)  exchange-traded fund 
B)  hedge fund 
C)  specialist fund 
D)  infrastructure fund 
A)  exchange-traded fund 
B)  hedge fund 
C)  specialist fund 
D)  infrastructure fund

Question 17

Tactical asset allocation does not involve the shifting of funds into or out of an asset class based upon mispricing in that market.

Accepted Answer

A) True 
 B)False

Question 18

The Ambachtsheer (1994)study showed a difference between the annual transactions costs of passive and active investors of __________ basis points.

Accepted Answer

A) 7 
B)  14 
C)  22 
D) 29 
A) 7 
B)  14 
C)  22 
D) 29

Question 19

When was the first exchange-traded fund listed in Australia?

Accepted Answer

A)  1989 
B)  1993 
C)  2001 
D)  2005 
A)  1989 
B)  1993 
C)  2001 
D)  2005

Question 20

What kind concept refers to the tendency for investors to over-weight their portfolio in investments in their home country and under-weight international investment?

Accepted Answer

A)  Home bias 
B)  Asset allocation 
C)  Portfolio management 
D)  Hedge fund 
A)  Home bias 
B)  Asset allocation 
C)  Portfolio management 
D)  Hedge fund

Which type of fund is sometimes called an alternative investment?

An approach to the management of bond portfolios involves choosing portfolios with a duration that matches the duration of liability cash flows.

A bond where the principal is amortised over the life of the security,and cash flows include both principal and interest,is known as an 'amortising bond'.

__________ involves knowledge of the factors influencing interest rates.

Portfolio insurance allows an investor to set a floor on the value of a portfolio.The underlying portfolio is hedged against a fall in value below the floor by setting up an offsetting portfolio of a call option.

Contingent immunisation is an example of strategies.

Interest rate anticipation is a bond _ approach and this requires second guessing the market and positioning the portfolio return.

A major disadvantage of passive over active portfolio management strategies is the minimisation of transactions costs.

__________ involves purchasing a portfolio of bonds that produce cash flows matching closely those cash flows of the underlying liability.

Surveys by Benson and Pope 1993 reveal the limited use of _;they also find that most funds employ _____,believing that they have superior skills in stock picking.

To construct a beta mimicking portfolio,a portfolio is constructed that has:

Reilly,Kao and Wright (1992)find that the major bond market indices in the USA have a correlation coefficient ranging from

A common example of cash-flow matching is:

Funds that set aside money during the working lives of people to cater for their financial needs during retirement are called:

__________ requires an investor to identify bonds with superior returns and similar characteristics to existing bonds,and to liquidate current bonds and purchase higher yielding bonds.

Which type of fund can typically be accessed through private placement,where a minimum subscription is required?

Tactical asset allocation does not involve the shifting of funds into or out of an asset class based upon mispricing in that market.

The Ambachtsheer (1994)study showed a difference between the annual transactions costs of passive and active investors of __________ basis points.

When was the first exchange-traded fund listed in Australia?

What kind concept refers to the tendency for investors to over-weight their portfolio in investments in their home country and under-weight international investment?

The Investment Decision

Australian Financial Markets

The International Investment Environment

Financial Management: Derivative Instruments and Information Sources

Money Market Securities

Bonds

Investor Preferences and Portfolio Concepts

Risky Asset Pricing Models and the Capm

Alternative Risky Asset Pricing Models

Concepts and Applications of Market Efficiency

Equity Valuation Models

Macro- and Industry Analysis of Share Markets

Qualitative Stock Selection

Quantitative Company Analysis

Futures and Forward Contracts

Option Contracts

Advanced Issues in Options

Alternative Investments

Performance Evaluation of Managed Funds

Filters

Exam 19: Portfolio Management

Which type of fund is sometimes called an alternative investment?

An approach to the management of bond portfolios involves choosing portfolios with a duration that matches the duration of liability cash flows.

A bond where the principal is amortised over the life of the security,and cash flows include both principal and interest,is known as an 'amortising bond'.

__________ involves knowledge of the factors influencing interest rates.

Portfolio insurance allows an investor to set a floor on the value of a portfolio.The underlying portfolio is hedged against a fall in value below the floor by setting up an offsetting portfolio of a call option.

Contingent immunisation is an example of strategies.

Interest rate anticipation is a bond _____________ approach and this requires second guessing the market and positioning the portfolio ____________ return.

A major disadvantage of passive over active portfolio management strategies is the minimisation of transactions costs.

__________ involves purchasing a portfolio of bonds that produce cash flows matching closely those cash flows of the underlying liability.

Surveys by Benson and Pope 1993 reveal the limited use of _________________;they also find that most funds employ _____________________,believing that they have superior skills in stock picking.

To construct a beta mimicking portfolio,a portfolio is constructed that has:

Reilly,Kao and Wright (1992)find that the major bond market indices in the USA have a correlation coefficient ranging from

A common example of cash-flow matching is:

Funds that set aside money during the working lives of people to cater for their financial needs during retirement are called:

__________ requires an investor to identify bonds with superior returns and similar characteristics to existing bonds,and to liquidate current bonds and purchase higher yielding bonds.

Which type of fund can typically be accessed through private placement,where a minimum subscription is required?

Tactical asset allocation does not involve the shifting of funds into or out of an asset class based upon mispricing in that market.

The Ambachtsheer (1994)study showed a difference between the annual transactions costs of passive and active investors of __________ basis points.

When was the first exchange-traded fund listed in Australia?

What kind concept refers to the tendency for investors to over-weight their portfolio in investments in their home country and under-weight international investment?

The Investment Decision

Australian Financial Markets

The International Investment Environment

Financial Management: Derivative Instruments and Information Sources

Money Market Securities

Bonds

Investor Preferences and Portfolio Concepts

Risky Asset Pricing Models and the Capm

Alternative Risky Asset Pricing Models

Concepts and Applications of Market Efficiency

Equity Valuation Models

Macro- and Industry Analysis of Share Markets

Qualitative Stock Selection

Quantitative Company Analysis

Futures and Forward Contracts

Option Contracts

Advanced Issues in Options

Alternative Investments

Performance Evaluation of Managed Funds

Filters

Interest rate anticipation is a bond _ approach and this requires second guessing the market and positioning the portfolio return.

Surveys by Benson and Pope 1993 reveal the limited use of _;they also find that most funds employ _____,believing that they have superior skills in stock picking.