THROUGH 79 RELATE TO PORTFOLIO MANAGEMENT. (10.5 MINUTES)...

Questions 73 through 79 relate to Portfolio Management. (10.5 minutes)

Which of the following portfolios will have the lowest diversification ratio? A portfolio of:

A)

30 equally-weighted stocks with companies from the same

industry.

B)

20 equally-weighted stocks with companies from different

industries.

C)

30 equally-weighted stocks with companies from different

Question #74 of 120

Question ID: 1146389

In a case where a client's capacity to bear risk is significantly less than the client's expressed willingness to bear risk, the most

appropriate action for a financial advisor is to:

counsel the client and attempt to change his attitude

towards risk.

base the assessment of risk tolerance in the IPS on

client’s ability to bear risk.

attempt to educate the client about investment risk and

correct any misconceptions.

Question #75 of 120

Question ID: 1146387

Which of the following statements about risk is most accurate?

The capital market line plots expected return against

market risk.

The efficient frontier plots expected return against

unsystematic risk.

The security market line plots expected return against

systematic risk.

Question #76 of 120

Question ID: 1146384

A portfolio manager is constructing a new equity portfolio consisting of a large number of randomly chosen domestic stocks.

As the number of stocks in the portfolio increases, what happens to the expected levels of systematic and unsystematic risk?

Systematic risk Unsystematic riskIncreases Remains the sameDecreases IncreasesRemains the same Decreases

Question #77 of 120

Question ID: 1146390

In an investor's IPS, a prohibition against investing in companies that sell tobacco products, alcohol, or products that are

harmful to the environment would be bestdescribed as:

regulatory factors.

unique preferences.

legal restrictions.

Question #78 of 120

Question ID: 1146380

Rolly Parker, CFA, has managed the retirement account funds for Misto Inc. for the last two years. Contributions and

withdrawals from the account are decided by Misto's CFO. The account history is as follows, with account values calculated

before same-date deposits and withdrawals:

Jan 1, 20X1 Beginning portfolio value $10 millionJul 1, 20X1 Account value $11.2 millionJul 1, 20X1 Deposit of cash $1.2 millionJan 1, 20X2 Account value $12.5 millionJan 1, 20X2 Withdrawal of cash $0.6 millionDec 31, 20X2 Account value $15 million

The appropriate annual return to use in evaluating the manager's performance is closest to:

9%.

19%.

22%.

Question #79 of 120

Question ID: 1146379

Which of the following pooled investment shares is least likely to trade at a price different from its NAV?

Exchange-traded fund shares.

Open-end mutual fund shares.

Closed-end mutual fund shares.

Question #80 of 120

Question ID: 1146395