Investment Advisor Client Suitability and Portfolio Management 3

Question 1

What does 'beta' measure in portfolio management?

Accepted Answer

The portfolio's sensitivity to market movements

Answer

The portfolio's absolute return

Answer

The portfolio's dividend yield

Answer

The portfolio's expense ratio

Question 2

A client who wants to maintain their current lifestyle throughout retirement and leave a significant estate would have what type of primary objectives?

Accepted Answer

Income, capital preservation, and growth

Answer

Capital appreciation and speculation

Answer

Maximum short-term gains

Answer

Tax deferral only

Question 3

Which investment constraint refers to restrictions on the types of investments a client is legally or ethically permitted to hold?

Accepted Answer

Legal and regulatory constraint

Answer

Liquidity constraint

Answer

Time horizon constraint

Answer

Tax constraint

Question 4

Dollar-cost averaging is best described as:

Accepted Answer

Investing fixed amounts at regular intervals regardless of market price

Answer

Investing a lump sum when markets are at their lowest

Answer

Buying only dividend-paying stocks

Answer

Selling investments when they reach a target price

Question 5

Which type of analysis focuses on evaluating a company's financial statements, management, and competitive position to determine intrinsic value?

Accepted Answer

Fundamental analysis

Answer

Technical analysis

Answer

Quantitative analysis

Answer

Macro analysis

Question 6

An investment adviser constructs a portfolio that closely tracks a market index with minimal active management. This approach is called:

Accepted Answer

Passive (index) investing

Answer

Tactical investing

Answer

Momentum investing

Answer

Concentrated portfolio management