Q1. Defining investor objectives in terms of mean and standard deviation:

A)   will typically simplify the process for the investment advisor.

B)   makes it more difficult for the investment advisor to select a suitable benchmark index.

C)   may make it easier for the investor to make a connection between the investment policy and the investor’s own goals.

Q2. Defining investor objectives in terms of mean and standard deviation:

A)   will increase the complexity of the process for the investment advisor.

B)   can make it difficult to estimate the probability that the objectives will be realized.

C)   may make it easier for the investor to make a connection between the investment policy and the investor’s own goals.

Q3. Defining investor objectives in terms of mean and standard deviation:

A)   may make it easier to estimate the probability that the objectives will be realized.

B)   usually makes it less likely that the investor will deviate from the investment policy because of current market conditions.

C)   may make selecting an asset allocation more difficult for the individual.

Q4. Investors who sell winning securities too soon and hold losing positions too long is an example of:

A)   both behavioral and traditional finance.

B)   behavioral finance.

C)   traditional finance.

答案和详解如下：

Q1. Defining investor objectives in terms of mean and standard deviation:

A)   will typically simplify the process for the investment advisor.

B)   makes it more difficult for the investment advisor to select a suitable benchmark index.

C)   may make it easier for the investor to make a connection between the investment policy and the investor’s own goals.

Correct answer is A)

Defining investor objectives in terms of mean and standard deviation will typically simplify the process for the investment advisor. However, this often makes it more difficult for the investor to see the connection between policy and their own goals, and may may make selecting an asset allocation more difficult for the individual. The selection of a benchmark is likely simplified if the investor’s objectives are specified in terms of mean and standard deviation.

Q2. Defining investor objectives in terms of mean and standard deviation:

A)   will increase the complexity of the process for the investment advisor.

B)   can make it difficult to estimate the probability that the objectives will be realized.

C)   may make it easier for the investor to make a connection between the investment policy and the investor’s own goals.

Correct answer is B)

Defining investor objectives in terms of mean and standard deviation can make it difficult to estimate the probability that the objectives will be realized. Therefore, this also often makes it more difficult for the investor to see the connection between policy and their own goals, and may make it more likely that deviations from policy will occur. It also simplifies the process for the investment advisor.

Q3. Defining investor objectives in terms of mean and standard deviation:

A)   may make it easier to estimate the probability that the objectives will be realized.

B)   usually makes it less likely that the investor will deviate from the investment policy because of current market conditions.

C)   may make selecting an asset allocation more difficult for the individual.

Correct answer is C)

Defining investor objectives in terms of mean and standard deviation may make selecting an asset allocation more difficult for the individual, since it can be hard to see how the choices affect the probability of success. In addition, this method of goal definition often makes it can make it difficult to estimate the probability that the objectives will be realized, and may make it more likely that deviations from policy will occur. The selection of a benchmark is likely simplified if the investor’s objectives are specified in terms of mean and standard deviation.

Q4. Investors who sell winning securities too soon and hold losing positions too long is an example of:

A)   both behavioral and traditional finance.

B)   behavioral finance.

C)   traditional finance.

Correct answer is B)

This is an example of behavioral finance. In traditional finance investors receive and interpret all relevant facts correctly and use them to make optimal decisions. In traditional finance investor's policy objectives are in terms of risk (standard deviation) and expected return in percent.

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