51 CFA Level 1 Practice Questions and Answers on Portfolio Management

Upgrade yourself to portfolio management with 51 CFA Level 1 Practice Questions and Answers on Portfolio Management. Those useful free CFA practice sample questions are developed in the way geared towards refining your critical thinking skill, revising study material and enhancing basic knowledge. Interestingly, the easy-to-access layout gives you fresh feeling working out all the practice questions and end up with great comfort. After clicking the submit button at the end of the test, you can know your weaknesses and strengths and define which areas need to be more focused. Your test will be automatically scored and the final result will come out. Hope you find it helpful!
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An ______ weighted portfolio is not necessarily the portfolio that provides the greatest reduction in risk

• equal
• event
• bid
• High

Three steps in Portfolio Management Process1. The ________ Step- begins with an analysis of the investors circumstances & KYCThis analysis results in an ___ that details the investment objectives and constraints2. The ________ step involves analysis of the risk and return characteristics of various asset classes3. The _______ step is where the manager must monitor changes and rebalance the portfolio periodically and compare it to its benchmark

• new redeem equity fees
• long short neutral
• contribution employee
• planning IPS execution feedback

Diversification allows an investor to reduce portfolio ____ without reducing the portfolios expected ______

• NAV fee
• risk return
• linear
• higher

ETFs may produce ____ capital gains liability compared to an index fund

• bid
• ask
• High
• less

An IPS should specify an objective benchmark such as an _____ return against the success of the portfolio management will be measures. It should be updated at least every few ______ and any time the investor's objectives or constraints change significantly

• linear
• NAV fee
• index years
• individual

Life insurance companies have ___ term investment time horizons, while P&C insurance have ___ term investment time horizon because claims are expected to arise sooner

• long high
• lowest
• long short
• bias long short

For BanksRisk Tolerance: _____ (High or Low)Investment Horizon: ____ (Short or long)Liquidity needs: ____ (High or Low)

• low short high
• long short
• long high
• Low Long Short High

For Defined benefit PensionsRisk Tolerance: _____ (High or Low)Investment Horizon: ____ (Short or long)Liquidity needs: ____ (High or Low)

• High
• High Long Low
• bias long short
• higher

Index funds are _________ managed; that is, the portfolio is constructed to match the performance of a particular index

• actively
• private
• passively
• ask

Buyout funds (private equity funds) typically buy entire public companies and take them ________

• cannot
• private
• High
• arbitrage

The alternative to portfolio perspective is to examine the risk and return of _________ investments in isolation

• actively
• equal
• index years
• individual

Mutual funds are one form of _______ investment

• pooled
• lowest
• portfolio
• bond

The investment objective of a bank is to earn more on the loans and investments than banks ___ for deposits. Banks seek to keep risk ___ and need adequate ________ to meet investor withdrawals as they occur

• low short high
• pay low liquidity
• type maturity
• portfolio

An ETF is similar to a closed end fund in that purchases and sales are made in the _____ rather than with the fund. Unlike closed end funds, they are ______ managed and there are special redemption provisions that keep their market price very close to their ___

• market passively NAV
• arbitrage
• passively
• money market