1. The investment policy statement is most accurately considered the: A. starting point of the portfolio management process. B. key intermediate step in the portfolio management process. C. end product of the portfolio management process
2. The component of an investment policy statement that defines the investment objectives is most likely to include information about: A. the investor's risk tolerance. B. unique needs and preferences of the investor. C. permitted asset types and use of leverage in the investment account.
3. Which of the following is least likely an example of a portfolio constraint? A. Higher tax rate on dividend income than on capital gains. B. Significant spending requirements in the near future. C. Minimum total return requirement of 8%.
4. In determining the appropriate asset allocation for a client's investment account, the manager should: A. consider only the investor's risk tolerance. B. incorporate forecasts of future economic conditions. C. consider the investor's risk tolerance and future needs, but not forecasts of market conditions.
5. Which of the following activities is most likely to be performed as part of the execution step of the portfolio management process? A. Completion of the investment policy statement. B. Top-down analysis based on macroeconomic conditions. C. Rebalancing the portfolio to the desired asset class exposures.