Q1. Typical individual investors tend not to understand the effects of correlation on their portfolio. Which of the following characteristics of a DC plan participant’s portfolio best reflects the attempt to derive benefits from the effects of correlation even though the participant does not understand those effects? A) Endorsement effect. B) 1/n diversification heuristics. C) Status quo bias.
Q2. Steve Perlewitz, a retirement plan specialist for Mercantile Asset Advisors (MAA), is discussing the behavioral characteristics of individual investors in defined contribution retirement plans in an effort to educate MAA’s sales team as they sell MAA’s services. In his presentation, Perlewitz makes the following comments: Comment 1: An investor whose decisions are impacted by mental accounting are likely to hold on to losing investments too long, and sell winning investments too soon.
Comment 2: Since mental accounting tends to guide investors toward more conservative asset classes, the portfolio of an investor impacted by mental accounting will tend to be more conservative than that of an investor who is not, assuming similar return objectives. Comment 3: The 1/n diversification methodology used by many DC plan participants is an example of naïve diversification. Comment 4: If a defined contribution plan investor has an appropriate allocation in their retirement plan, the same allocation should also apply to their other investment accounts. After listening to Perlewitz’s presentation, sales team leader Vicki Bruning would be CORRECT to agree with: A) Comments 1, 2, and 4 only. B) Comments 2 and 3 only. C) Comment 3 only.
| 
发表于 2009-1-19 15:27
| 
