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LOS s: Discuss the issues involved in manager continuation policy decisions, including the costs of hiring and firing investment managers.
Q1. Suppose that a portfolio management firm has decided that the costs of hiring and firing managers are excessive. Which of the following would be their most appropriate course of action? The firm should:
A) reduce both Type I and Type II errors.
B) tolerate more Type I error to reduce Type II error.
C) tolerate more Type II error to reduce Type I error.
Q2. Suppose that a portfolio management firm has abnormally high turnover in their staff. Which of the following is the most likely scenario?
A) The firm’s Type I error rate is high and their Type II error rate is low.
B) The firm’s Type I error rate is low and their Type II error rate is high.
C) The firm’s Type I error rate is high and their Type II error rate is high.
Q3. Which of the following would NOT be a feature of a well formulated manager continuation policy?
A) Decisions to replace managers should always be taken on a clear cost benefit analysis basis.
B) A formalized, written manager continuation policy including goals and guidelines.
C) Underperformance, in any circumstances, will lead to automatic replacement of the manager. | 
发表于 2009-4-10 15:03
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