1. Compare active and passive investment philosophies. (6 marks)

2. Your client is very concerned about downside risk. As such, she would like to choose an asset allocation that minimise the probability of return below the risk-free rate of 3.5%. Based on the data below, recommend an asset allocation for your client. (4 marks)

Asset Allocation	Expected return	Standard deviation
A	12%	17.5%
B	7.5%	13.5%
C	5.5%	9.5%

3. Explain the importance of portfolio monitoring and rebalancing. (4 marks)

4. Explain tax effective investments and investment gearing strategies. What type of clients are appropriate for these investment strategies? (4 marks)