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Investment Portfolio Management Flashcards

7 cards from real CPFM 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 Portfolio Management flashcards as text

  1. Tax-loss harvesting is used to:

    Answer: Offset capital gains by realizing losses

    Tax-loss harvesting realizes losses to offset capital gains and reduce tax liability.

  2. The risk-free rate is most commonly proxied by:

    Answer: U.S. Treasury securities

    Short-term U.S. Treasury securities are typically used as the proxy for the risk-free rate.

  3. A portfolio with a beta of 1.5 is expected to:

    Answer: Move 50% more than the market

    A beta of 1.5 means the portfolio tends to move 50% more than the overall market.

  4. Which asset class typically serves as an inflation hedge?

    Answer: Treasury Inflation-Protected Securities (TIPS)

    TIPS adjust principal with inflation, helping preserve purchasing power.

  5. The information ratio measures:

    Answer: Active return relative to tracking error

    The information ratio divides active return by tracking error, gauging consistency of outperformance.

  6. A core-satellite portfolio strategy combines:

    Answer: A passive core with active satellite positions

    Core-satellite pairs a low-cost passive core with targeted active satellite holdings seeking alpha.

  7. Liquidity risk refers to the possibility that an asset:

    Answer: Cannot be sold quickly without a significant price concession

    Liquidity risk is the danger of being unable to sell an asset promptly without accepting a lower price.