Reading 10: Prudence in Perspective

LOS a: Explain the basic principles of the new Prudent Investor Rule.

1、Which of the following statements is part of the basic principles of the new Prudent Investor Rule?

A)   Current income for the trust is totally disregarded in favor of growth.

B)   Trustees must consider each investment against its own merits.

C)   Diversification is not expected in portfolios to reduce risk.

D)   Excessive trading and fees should be avoided.

The correct answer was D)     

Current income must be considered in tandem with the need for growth. Investments in a portfolio should be considered based on the contribution to the portfolio's risk. Diversification is expected to reduce risk.

[此贴子已经被作者于2008-1-17 12:09:48编辑过]