“EXECUTION OF PORTFOLIO DECISIONS” THE CANDIDATE SHOULD BE ABLE TO

41. “Execution of Portfolio Decisions” The candidate should be able to: k) describe the suitable uses of major trading tactics, evaluate their relative costs, advantages, and weaknesses, and recommend a trading tactic when given a description of the investor’s motivation to trade, the size of the trade, and key market characteristics; l) explain the motivation for algorithmic trading and discuss the basic classes of algorithmic trading strategies; m) discuss and justify the factors that typically determine the selection of a specific algorithmic trading strategy, including order size, average daily trading volume, bid-ask spread, and the urgency of the order; 2008 Level III Guideline Answers Morning Session – Page 28 of 40 Question: 8 Topic: Portfolio Management – Execution of Portfolio Decisions Minutes: 14 Guideline Answer: PART A Template for Question 8-A i. Recommend the best Justify the recommended strategy with two reasons. trading strategy for Brock. Note: A correct justification will cite specific information (circle one) provided in the case.