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In the special issues that alternative investments raise for investment advisors of private wealth clients, decision risk is associated with:

A)making hiring and firing decisions and general employee turnover of the investment firm.
B)communicating with the clients.
C)
changing a strategy at the time the portfolio has incurred a large loss.
D)assessing the investment opportunity.


Answer and Explanation

Decision risk is the risk of irrationally changing a strategy.

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Reading 34: Alternative Investments Portfolio Management-

CFA Institute Area 8-11, 13: Asset Valuation
Session 11: Alternative Investments for Portfolio Management
Reading 34: Alternative Investments Portfolio Management
LOS c: Explain the special issues that alternative investments raise for investment advisers of private wealth clients.

In the special issues that alternative investments raise for investment advisors of private wealth clients, with respect to tax issues and suitability:

A)tax issues are a special issue to consider but suitability is not.
B)
both are explicitly special issues to consider.
C)suitability is a special issue to consider but tax issues are not.
D)neither tax issues nor suitability are special issues to consider.


Answer and Explanation

Special issues that advisors for private-wealth clients should address are tax issues, determining suitability, communicating with the client, decision risk, and determining if they have a large position in a closely-held company.

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Bernice Clark, CFA, is analyzing the portfolio of a private wealth client. In the process, Clark wants to address special issues that alternative investments raise for her client. The special issues would:

A)include measuring the ownership in the clients corporate bond portfolio and the clients ownership in closely held companies.
B)
not include measuring the ownership in the clients corporate bond portfolio but would include measuring the clients ownership in closely held companies.
C)not include measuring the ownership in the clients corporate bond portfolio and not include measuring the clients ownership in closely held companies.
D)include measuring the ownership in the clients corporate bond portfolio but would not include measurement the clients ownership in closely held companies.


Answer and Explanation

Special issues that advisors for private-wealth clients should address are tax issues, determining suitability, communicating with the client, decision risk, and determining if they have a large position in a closely-held company. Measuring the ownership in corporate bonds is not a special issue.

[此贴子已经被作者于2008-9-18 17:14:16编辑过]

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