CPS Investment Strategies and Asset Allocation 3

Question 1

What is 'tax-loss harvesting' as a portfolio strategy?

Accepted Answer

Selling securities at a loss to offset capital gains and reduce taxes

Answer

Tax-loss harvesting sells securities that have declined in value to realize losses that can offset capital gains, reducing current tax liability.

Question 2

What is 'momentum investing'?

Accepted Answer

Buying securities that have recently performed well, expecting continued outperformance

Answer

Momentum investing buys securities that have shown recent price strength, based on the tendency of past winners to continue outperforming short-term.

Question 3

What is 'dividend growth investing'?

Accepted Answer

Investing in companies with a history of consistently growing their dividends

Answer

Dividend growth investing focuses on companies with strong records of consistently increasing their dividends, combining income with capital appreciation potential.

Question 4

What is 'portfolio immunization' in bond management?

Accepted Answer

Structuring a bond portfolio so its value is protected against interest rate changes

Answer

Portfolio immunization matches the duration of bond assets to the investment horizon so that interest rate changes have minimal net impact on the portfolio's value.

Question 5

What is 'ESG investing'?

Accepted Answer

Investing based on Environmental, Social, and Governance criteria

Answer

ESG investing incorporates Environmental, Social, and Governance factors alongside financial analysis when making investment decisions.

CPS - Certified Portfolio Specialist Practice Test

CPS - Certified Portfolio Specialist Practice Test

CPS Investment Strategies and Asset Allocation 3