PM 1.12 11.04

None

• A. 27.6%.
• B. 17.9%.
• C. 35.2%.

A portfolio contains equal weights of two securities having the same standard deviation. If the correlation between the returns of the two securities was to decrease, the portfolio risk would most likely:

• A. increase.
• B. remain the same.
• C. decrease.

The return measure that best allows one to compare asset returns earned over different length time periods is the:

• A. holding period return.
• B. annualized return.
• C. net portfolio return.

ABC Fund invests in Singapore’s government debt with maturities up to three months. It is most likely classified as a:

• A. fixed-income arbitrage fund.
• B. money market fund.
• C. bond mutual fund.

Q. With respect to an equally-weighted portfolio made up of a large number of assets, which of the following contributes the most to the volatility of the portfolio?

• A. Average variance of the individual assets.
• B. Standard deviation of the individual assets.
• C. Average covariance between all pairs of assets.

None

• A. Asset 1 and Asset 2.
• B. Asset 1 and Asset 3.
• C. Asset 2 and Asset 3.

None

• A. 4.3%.
• B. 4.4%.
• C. 4.5%.

None

• A. Investor A increased the investment in the fund at the end of year 1 whereas investor B did not make any additions or withdrawals.
• B. Investor B decreased the investment in the fund at the end of year 1 whereas investor A did not make any additions or withdrawals.
• C. The investors invested different amounts at inception and afterward did not make any additions or withdrawals.

Security analysis is most likely a part of which step in the portfolio management process?

• A. The feedback step
• B. The execution step
• C. The planning step

None

• A. 5.93%.
• B. 1.45%.
• C. 1.78%.