Investment Analysis & Portfolio Management Flashcards
6 cards from real CME-1 practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Investment Analysis & Portfolio Management flashcards as text
What is a 'benchmark' in the context of Saudi equity portfolio management?
Answer: A standard index (e.g., TASI) used to measure portfolio performance against the market
A benchmark is a reference index (such as the Tadawul All Share Index, TASI) against which portfolio returns and risk are measured for performance evaluation.
What is 'rebalancing' in portfolio management?
Answer: Periodically adjusting portfolio weights back to target allocations after market movements
Rebalancing restores the portfolio to its target asset allocation by selling overweight assets and buying underweight ones, maintaining the intended risk profile.
What does the term 'liquidity risk' mean in investment management?
Answer: Risk of being unable to sell an investment quickly at a fair price
Liquidity risk is the risk that an investor cannot exit a position quickly without significantly moving the price or accepting a large discount to fair value.
What is the difference between 'growth' and 'income' investment strategies?
Answer: Growth seeks capital appreciation from rising share prices; income seeks regular cash returns through dividends or interest
Growth strategies target companies expected to increase in value; income strategies prioritise securities paying regular dividends or coupon payments for steady cash flow.
What is 'concentration risk' in portfolio management?
Answer: Excessive exposure to a single security, sector, or geography that amplifies potential losses
Concentration risk arises when a portfolio is overly exposed to a single company, sector, or region, so an adverse event in that area disproportionately impacts the portfolio.
What does the term 'asset allocation' refer to in portfolio management?
Answer: Distributing investments across asset classes (equities, bonds, cash, real estate) to balance risk and return
Asset allocation is the strategic distribution of investments across different asset classes based on the investor's goals, risk tolerance, and time horizon.
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