Portfolio Management Fundamentals

Portfolio Management Fundamentals
Below is a scored review of your assessment. All questions are shown.

Correct Answer
Partially Correct
Incorrect Answer
Portfolio Manager, Asset Manager, and Investment Manager are vague job titles that can have so many
different meanings that they are often used interchangeably in the finance industry.
Your Answer
True
Correct Answer
True
Explanation
None.
Which of the following are true about an active investment style? Select all that apply.
Your Answer
More risk and return
Trying to earn more than a benchmark or index
Correct Answer
More risk and return
Trying to earn more than a benchmark or index
Explanation
None.
Which of the following are true about a passive investment style? Select all that apply.
Your Answer
Attempts to replicate a benchmark or index

Typically doesn’t have a risky investing mandate
Usually lower fees relative to an active investment style
Correct Answer
Attempts to replicate a benchmark or index

Typically doesn’t have a risky investing mandate
Usually lower fees relative to an active investment style
Explanation
None.
What will a traditional portfolio manager most likely manage? Select all that apply.
Your Answer
Mutual Fund
Pension Fund
Correct Answer
Mutual Fund
Pension Fund
Explanation
None.
What will a non-traditional portfolio manager most likely manage? Select all that apply.
Your Answer
Hedge Fund
Venture Capital
Correct Answer
Hedge Fund
Venture Capital
Explanation
None.
A top-down approach to portfolio management is:
Your Answer
Allocating risk/capital first to countries, then sectors, then individual assets
Correct Answer
Allocating risk/capital first to countries, then sectors, then individual assets
Explanation
None.
Active and passive investing are exclusive, as are traditional and non-traditional managers. Traditional
funds never use active strategies or enter the realm of non-traditional investing strategies.
Your Answer
False
Correct Answer
False
Explanation
None.
Which of the following statements is correct?
Your Answer
Traditional funds like pensions and insurance companies must ensure their portfolio is stable enough to
pay pensions and policy claims in the future.
Correct Answer
Traditional funds like pensions and insurance companies must ensure their portfolio is stable enough to
pay pensions and policy claims in the future.
Explanation
None.
What is portfolio construction?
Your Answer
The process of understanding how the selection of asset classes or securities combine to achieve
investment objectives.
Correct Answer
The process of understanding how the selection of asset classes or securities combine to achieve
investment objectives.
Explanation
None.
10
A Portfolio Manager usually chooses his/her own investment policy and monitors adherence to the
policy him/herself.
Your Answer
False
Correct Answer
False
Explanation
None.
11
Which of the following reduce the Universe of Investments to the Investable Universe or portfolio
mandate?
Your Answer
All of the above
Correct Answer
All of the above
Explanation
None.
12
Adding constraints to a portfolio changes the optimal portfolio by:
Your Answer
Allowing the portfolio manager to invest in portfolios that produce better returns than was possible
before adding the constraints.
Correct Answer
Shifting the efficient frontier to the right and reducing the potential profits for each level of risk taken.
Explanation
None.
13
In the interactive exercise, Diego outperformed Frida because only total returns are important for all
portfolio managers.
Your Answer
False
Correct Answer
False
Explanation
None.
14
A key difference between amateur and professional investors is:
Your Answer
Professional managers are assessed by relative performance, not absolute performance
Correct Answer
Professional managers are assessed by relative performance, not absolute performance
Explanation
None.
15
Performance attribution is useful for:
Your Answer
Both B and C
Correct Answer
Both B and C
Explanation
None.
16
People who will find Portfolio Management roles rewarding are usually:
Your Answer
Willing to take calculated risks
Correct Answer
All of the above
Explanation
None.
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Portfolio Management Fundamentals

Below is a scored review of your assessment. All questions are shown.

Attempts to replicate a benchmark or index

Attempts to replicate a benchmark or index

A top-down approach to portfolio management is:

Allocating risk/capital first to countries, then sectors, then individual assets

Allocating risk/capital first to countries, then sectors, then individual assets

Which of the following statements is correct?

What is portfolio construction?

All of the above

All of the above

Adding constraints to a portfolio changes the optimal portfolio by:

A key difference between amateur and professional investors is:

Professional managers are assessed by relative performance, not absolute performance

Professional managers are assessed by relative performance, not absolute performance

Performance attribution is useful for:

All of the above

Privacy Policy. Assessment content is copyright 2022, Corporate Finance Institute.

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