IEWM A5 (CO6)

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IEWM A5 (CO6)

ALL QUESTIONS ARE COMPULSORY

Email *

STUDENT NAME *

SECTION *

Investment means *

2 points

Commitment of funds for future income

Net additional to economy capital stock

Short-term commitment of funds

capital gain

Speculation can be distinguished from investment in the following way *

2 points

Investment is high risk, speculation is low

investment is short term of period, speculation covers long term period

Investment is based on Planning of funds for safety, liquidity, profitability and stability. Speculation on hauches and benefits

Investment is your own funds, speculation consists of other people's funds

A gambler is one who makes planned investment *

2 points

believes in low risks

considers high risk and high profit

expects other people to plan his resources in one best security

buying government securites with safety of return

The steps to establishing an investment policy are to state the *

2 points

minimum investment and maximum fees

SEC guidelines for prudent man investing

objectives and constraints and preferences.

none

Investors can normally afford to assume larger risks in the ____ phase of the life-cycle *

2 points

accumulation

consolidation

spending

gifting

in the top down approach of asset allocation, industry analysis should be conducted before company analysisbecause *

2 points

the goal of top-down approach is to identify those companies in non-cyclical industries with the lowest P/E ratio

most valuation models recommend the use of industry-wide averaage required returns, rather than individual returns

an industry's propsects within the global business environment are a major determinant of how well individual firm in the industry perform

None of the above

An individual investors specifies to her or his investor advisors that his or her porfolio must produce a minimum amount of cash each period . This investment constraints is best classified as *

2 points

legal & regulatory

liquidity

unique circumstances

all of the above

which of the following would be assessed first in a top -down valuation approach ? *

2 points

Industry risks

Fiscal policy

ROE

None of the above

A porfolio Manager who believes equity securities are overvalued in the short term reduced the weight of equities in her porfolio to 35% from its longer term target weight of 40%. the decision is best described as an example of *

2 points

rebalancing

strategic asset allocation

tactical asset allocation

None of the above

which of the statement about the importance of risk and return in the investmeent objectives is least accurate? *

2 points

Expressing investment goals in terms of risk is more appropriate than expressing goals in terms of return

the return objectives may be stated in Rs amount even if the risk objectives is stated in Percentage

the investor's risk tolerance is likely to determine what level of return will be feasible

None of the above

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