Exam 22: Investors and the Investment Process

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 their investment portfolio.The biggest constraint a planner would face with this client is a ___________ constraint.

The asset universe is the _____________________.

A family will retire in a few years.They have a high tax bracket and are concerned about their after tax rate of return.A meeting with their financial planner reveals they are primarily focused on safety of principal and they will need a 6% to 8% average rate of return on their portfolio.They desire a diversified portfolio and liquidity is likely to be a concern due to health reasons.If you had to choose from the list below which of the following asset allocations seems to best fit this family's situation?

The prudent investor rule requires __________.

For a bank,the difference between the interest rate charged to borrowers and the interest rate paid on liabilities is called the __________.

Under a "passive core" portfolio management strategy,a manager would ___________.

A mutual fund may not hold more than ______ of the shares of any publicly traded company.

You are thinking of investing in one of two assets.Asset A has higher systematic risk than Asset B. You can be sure that Asset A's _______ return will be higher than Asset B, but you can't be sure if Asset A's _______ return will be higher than Asset B's.

An investor refuses to invest in any firm that produces alcohol or tobacco.This is an example of a ___________ constraint.

When a company sets up a defined contribution pension plan,the __________ bears all the risk and the __________ receives all the return from the plan's assets.

Both a wife and her husband work in the airline industry.They are in their 40s and they have a high tax bracket and are concerned about their after tax rate of return.A meeting with their financial planner reveals they are primarily focused on long term capital gains and they will need at least a 9% to 11% average rate of return to meet their retirement goals.They desire a diversified portfolio and liquidity is not currently a major concern.If you had to choose from the list below which of the following asset allocations seems to best fit their situation?

The objectives of personal trusts normally are __________ in scope than those of individual investors and personal trust managers typically are __________ than individual investors.

A ______ insurance policy provides death benefits,with no buildup of cash value.

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

Major functions of the investment committee include all but which one of the following?

At which one of the following institutions is liquidity usually the most important?

To _____ means to mitigate a financial risk.

Under the provisions of a typical defined benefit pension plan,the employer is responsible for _____________.

The term "investment horizon" refers to __________.

When used in the context of investment decision making,the term "liquidity" refers to _____________.