Investment Strategies and Portfolio Management Flashcards
7 cards from real CIFC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Investment Strategies and Portfolio Management flashcards as text
A balanced fund that holds 60% equities and 40% fixed income primarily appeals to investors seeking:
Answer: A mix of growth and income with moderate risk
A 60/40 balanced fund blends equity growth potential with bond income and stability, suiting moderately risk-tolerant investors.
Which of the following best describes a passive investment strategy?
Answer: Replicating a market index to match its returns at low cost
Passive investing seeks to replicate a benchmark index rather than outperform it, resulting in lower turnover and fees.
Liquidity risk in a portfolio context refers to the risk that:
Answer: An asset cannot be sold quickly at a fair price without significant loss
Liquidity risk is the risk of being unable to exit a position at or near its fair market value in a timely manner.
A Canadian investor adding a U.S. equity fund to their portfolio is exposed to which additional risk compared to a domestic fund?
Answer: Currency (foreign exchange) risk
Investing in foreign assets denominated in another currency introduces currency risk, as CAD/USD fluctuations affect Canadian-dollar returns.
Which strategy involves systematically increasing fixed-income exposure and reducing equity exposure as an investor approaches retirement?
Answer: Glide path (target-date) strategy
A glide path gradually shifts asset allocation toward lower-risk fixed income as the target retirement date approaches.
Concentration risk in a portfolio is best mitigated by:
Answer: Spreading investments across multiple uncorrelated asset classes and securities
Broad diversification across asset classes, geographies, and sectors reduces the impact of any single holding's poor performance.
A portfolio manager with a value investing style would typically look for stocks that are:
Answer: Priced below their intrinsic value based on fundamental analysis
Value investors seek securities trading at a discount to estimated intrinsic value, expecting the market to eventually recognize that value.
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