Q1. Which of the following statements about return objectives is FALSE? A) To achieve the capital preservation objective, the nominal rate of return must exceed the inflation rate. B) To achieve the capital appreciation objective, the nominal rate of return must exceed the rate of inflation. C) The total return objective is less risky than the capital appreciation objective.
Q2. Which of the following return objectives is most likely the primary objective given a 70 year-old widow who owns a portfolio comprised of 100% Treasury bonds? A) Capital preservation. B) Current income. C) Capital appreciation.
Q3. Which of the following statements about return objectives is TRUE? A) The total return objective considers returns from both capital gains and current income, net of expected inflation. B) To achieve the capital appreciation objective, the nominal rate of return must exceed the rate of inflation. C) To achieve the capital appreciation objective, the real rate of return must exceed the rate of inflation.
|