Reading 31: Equity Portfolio Management－LOS o active, contrast

tycoon

 CFA Institute Area 8-11, 13: Asset Valuation
Session 10: Equity Portfolio Management
Reading 31: Equity Portfolio Management
LOS o: Compare and contrast the sell disciplines of active investors.

tycoon

Which of the following selling disciplines would be best for an investor who is concerned about the tax implications of a trade?

A) Deteriorating Fundamentals.

B) Target price.

C) Opportunity cost.

D) Up-from-cost.

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Answer and Explanation

If an investor factors in the transactions costs and tax consequences of the sale of the existing security and the purchase of the new security, this approach is referred to as an opportunity cost sell discipline.

[此贴子已经被作者于2008-9-18 17:26:08编辑过]

tycoon

In which of the following selling disciplines would the investor sell the stock after it had reached its intrinsic value?

A) Valuation-level.

B) Down-from-cost.

C) Up-from-cost.

D) Target price.

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Answer and Explanation

In a target price sell discipline, the manager determines the stocks fundamental value at the time of purchase and later sells the stock when it reaches this level.

tycoon

Which of the following provides the correct range of annual turnover in a value investors portfolio?

A) 20% - 80%.

B) 0% - 20%.

C) 80% - 150%.

D) 60% - 300%.

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Answer and Explanation

The frequency of buying and selling in a portfolio will be driven by the managers style. Value investors are typically long-term investors who buy undervalued stocks and hold them until they appreciate. Annual turnover for value managers usually varies from 20% to 80%. Growth managers base their decisions on earnings growth and are less patient. They often sell after the next earnings statement comes out. Thus it is not unusual to see annual turnover of 60% to several hundred percent for these investors.