CRC Investment Strategies & Asset Allocation Flashcards
6 cards from real CRC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CRC Investment Strategies & Asset Allocation flashcards as text
For a CRC client heavily concentrated in employer stock, what is the primary risk that must be addressed?
Answer: Concentration risk
Concentration risk occurs when too much of a portfolio is in a single stock or sector, meaning poor performance by that one holding can severely damage the entire retirement account.
Which investment strategy uses both stocks and bonds but adjusts the mix daily based on market conditions and volatility targets?
Answer: Dynamic asset allocation
Dynamic asset allocation actively shifts the portfolio mix in response to changing market conditions, economic outlooks, or volatility targets to manage risk and opportunity.
What is the key advantage of target-date funds for retirement investors?
Answer: They automatically adjust asset allocation as the target retirement date approaches
Target-date funds automatically shift from aggressive to conservative allocations over time using a glide path, providing a hands-off, age-appropriate retirement investment solution.
In retirement portfolio management, what does 'liability-driven investing' (LDI) primarily focus on?
Answer: Matching investment assets to future income liabilities and spending needs
LDI matches the portfolio's assets to the client's anticipated future spending liabilities, ensuring sufficient funds are available to meet specific retirement income needs.
What is 'alpha' in the context of retirement portfolio performance evaluation?
Answer: The excess return of a portfolio above its benchmark
Alpha measures the value added (or subtracted) by a portfolio manager relative to a benchmark index, indicating whether active management delivered superior returns after risk adjustment.
Why is 'liquidity' an important consideration when constructing a retirement portfolio?
Answer: Retirees need accessible funds for near-term expenses without forced selling of long-term investments
Maintaining adequate liquidity ensures retirees can meet near-term expenses and emergencies without being forced to sell growth assets at inopportune times.