QUESTION 1

1. Which of the following statements about risk is NOT correct? Generally, greater

   	a.	spending needs allow an investor to take greater risk
   	b.	existing wealth allows for greater risk-taking
   	c.	insurance coverage allows for greater risk-taking

QUESTION 2

1. Last year, a portfolio manager earned a return of 4%. The portfolios beta was 1.5. For the same period, the market return was 10%, and the average risk-free rate was 3%. Jensens alpha for this portfolio is closest to:

   	a.	2.4%
   	b.	-5.2%
   	c.	-9.5%

QUESTION 3

1. Which of the following is NOT a characteristic for value companies

   	a.	They tend to pay high dividends
   	b.	They tend to lower earnings growth rates
   	c.	They tend to have high price-to-earnings ratios

QUESTION 4

1. The major components of a typical investment policy statement (IPS) do NOT include:

   		Investment manager's compensation
   		Investment objectives, constraints and guidelines
   		Portfolio review process

QUESTION 5

1. Over the long run, the primary source of investment return and risk can most likely be attributed to:

   	a.	Asset allocation
   	b.	Market timing
   	c.	Security selection