Reading 51: Portfolio Management: An Overview-LOS c 习题精选 2011, management, statements, following

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Session 12: Portfolio Management
Reading 51: Portfolio Management: An Overview

LOS c: Describe the steps in the portfolio management process.

 

 

Which of the following statements about the steps in the portfolio management process is NOT correct?

A) Rebalancing the investor’s portfolio is done on an as-needed basis, and should be reviewed on a regular schedule.

B) Implementing the plan is based on an analysis of the current and future forecast of financial and economic conditions.

C) Developing an investment strategy is based on an analysis of historical performance in financial markets and economic conditions.

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Developing an investment strategy is based primarily on an analysis of the current and future financial market and economic conditions. Historical analysis serves to help develop an expectation for future conditions.

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Which of the following is generally the first general step in the portfolio management process?

A) Write a policy statement.

B) Develop an investment strategy.

C) Specify capital market expectations.

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The policy statement is the foundation of the entire portfolio management process. Here, both risk and return are integrated to determine the investor’s goals and constraints.

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In the top-down approach to asset allocation, industry analysis should be conducted before company analysis because:

A) an industry's prospects within the global business environment are a major determinant of how well individual firms in the industry perform.

B) most valuation models recommend the use of industry-wide average required returns, rather than individual returns.

C) the goal of the top-down approach is to identify those companies in non-cyclical industries with the lowest P/E ratios.

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In general, an industry’s prospects within the global business environment determine how well or poorly individual firms in the industry do. Thus, industry analysis should precede company analysis. The goal is to find the best companies in the most promising industries; even the best company in a weak industry is not likely to perform well.

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Which of the following would be assessed first in a top-down valuation approach?

A) Fiscal policy.

B) Industry return on equity (ROE).

C) Industry risks.

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In the top-down valuation approach, the investor should analyze macroeconomic influences first, then industry influences, and then company influences. Fiscal policy, as part of the macroeconomic landscape, should be analyzed first.

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