Private Wealth Management - Reading 14: Managing Individual 2009, class, wealth, taking, source

mayanfang1

Q4. Given Fisher’s age and her source of wealth, Fisher’s familiarity with risk taking is:

A)   most likely minimal, but she should be willing to accept a higher than average level of risk.

B)   most likely minimal, and she should be willing to accept a lower than average level of risk.

C)   probably high given her lifestyle, and she should be willing to accept a higher than average level of risk.

Q5. The use of a questionnaire to assess Litner’s personality type is:

A)   a standard approach, and Fisher appears to be a methodical investor.

B)   a standard approach, and Fisher appears to be a spontaneous investor.

C)   a standard approach, and Fisher appears to be an anchoring investor.

Q6. Fisher’s desire to create her portfolio one asset at a time is:

A)   very unusual, but it is an acceptable method to create a portfolio for an individual investor, and Litner should follow Fisher‘s preferences.

B)   not unusual and is indicative of the role of investor psychology in investment choices.

C)   very unusual, and indicates that Litner should not take Fisher on as a client.

Q7. Fisher’s fear of the costs associated with rebalancing and turnover are:

A)   justified for rebalancing but not for turnover.

B)   not justified for rebalancing but are justified for turnover.

C)   justified for both rebalancing and turnover.

Q8. Litner’s attempt to gather information for the IPS through a series of conversations, as described, is:

A)   one of many appropriate ways for gathering information.

B)   not recommended and deemed inappropriate.

C)   recommended because it allows Litner to assess the accuracy of the information for consistency.

mayanfang1

答案和详解如下：

Q4. Given Fisher’s age and her source of wealth, Fisher’s familiarity with risk taking is:

A)   most likely minimal, but she should be willing to accept a higher than average level of risk.

B)   most likely minimal, and she should be willing to accept a lower than average level of risk.

C)   probably high given her lifestyle, and she should be willing to accept a higher than average level of risk.

Correct answer is A)

Persons who acquire their wealth through a windfall tend to have minimal familiarity with risk taking. Given that her age is less than 40, she should be able to accept a higher than average level of risk.

Q5. The use of a questionnaire to assess Litner’s personality type is:

A)   a standard approach, and Fisher appears to be a methodical investor.

B)   a standard approach, and Fisher appears to be a spontaneous investor.

C)   a standard approach, and Fisher appears to be an anchoring investor.

Correct answer is A)

Such a questionnaire is widely used for just his purpose. Given that Fisher wants to learn about each investment before she invests indicates she is methodical.

Q6. Fisher’s desire to create her portfolio one asset at a time is:

A)   very unusual, but it is an acceptable method to create a portfolio for an individual investor, and Litner should follow Fisher‘s preferences.

B)   not unusual and is indicative of the role of investor psychology in investment choices.

C)   very unusual, and indicates that Litner should not take Fisher on as a client.

Correct answer is B)

Fisher’s desire to compose a portfolio one position at a time is fairly typical of unsophisticated investors. Litner should try to convince Fisher of the benefits of taking a portfolio approach.

Q7. Fisher’s fear of the costs associated with rebalancing and turnover are:

A)   justified for rebalancing but not for turnover.

B)   not justified for rebalancing but are justified for turnover.

C)   justified for both rebalancing and turnover.

Correct answer is C)

Rebalancing and turnover can both increase transactions costs and can have unfavorable tax consequences.

Q8. Litner’s attempt to gather information for the IPS through a series of conversations, as described, is:

A)   one of many appropriate ways for gathering information.

B)   not recommended and deemed inappropriate.

C)   recommended because it allows Litner to assess the accuracy of the information for consistency.

Correct answer is B)

It is not appropriate because planning return expectations should take place concurrently with risk tolerance discussions.

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