PM MODULE 85

Question 1

85.1 What is the portfolio approach?

What is portfolio perspective and diversification ratio?

Answer 1

Portfolio perspective = evaluating individual investments in respect to their contribution to their risk and return of an investors portfolio

diversification ratio = is calculated as the ratio of the risk of an equally weighted portfolio of n number of securities measured by standard deviation of returns to the risk of a single security selected at random from that n number of securities
- we want it to be lower than 1

Question 2

85.1 What is the portfolio management process?

Answer 2

Question 3

85.1 Name some types of investors?

Answer 3

Question 4

85.1 Name the characteristics of different types of investors:

Answer 4

Question 5

85.1 What are the two types of pension plans?

Answer 5

Question 6

85.1 What types of firms are present in the asset management industry?

Answer 6

Question 7

85.1 What are some different types of pooled investments?

Answer 7

SMA - single investor, they own the securities directly

Question 8

85.1 What is the difference between between an open ended and closed mutual fund?

Also what is the difference between load and no load?

Answer 8

open ended = buying and selling shares with a 2D investment company

closed = trading on an exchange

load/no load = paying a commission to buy, vs not paying a commission to buy