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CRPC Module 2 Exam Questions and Answers latest version 2024( A+ GRADED 100% VERIFIED).
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CRPC Module 2 Exam Questions and Answers latest version 2024( A+ GRADED 100% VERIFIED).
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CRPC Module 2Alpha
(see Jensen's alpha).
Annuity (insurance product).
A periodic payment. In insurance terms, it is a form of policy or payout arrangement that
provides a specified periodic cash payment to the annuitant.
Annuity (fixed).
An insurance product that provides a series of equal dollar periodic payments.
Asset allocation.
The apportioning of available funds among a number of different categories-or classes-of
assets, such as stocks, bonds, cash
Barbell strategy (for bonds).
Splits the bond portion of the portfolio between short-term and long-term bonds. Both ends then
stagger maturities similar to the ladder approach. For example, a $1 million portfolio could
allocate $100,000 in one-, two-, three-, four-, and five-year maturities. As the one-year bonds
mature, the proceeds are reinvested in five-year bonds, thereby maintaining that maturity
structure. On the other end, $100,000 could be invested in 16-, 17-, 18-, 19-, and 20-year
maturities. (In practice, the long end of the barbell can be 11- to 15-year bonds, 26- to 30-year
bonds, or whatever bond length the adviser believes is best for the client.) After one year, when
the 16- year bonds become 15-year bonds, they are sold and reinvested in 20-year bonds,
again maintaining that maturity structure.
Beta coefficient.
It is a measure of a security's systematic risk-risk that cannot be diversified. Is a measure of the
volatility of an individual asset relative to the volatility of an appropriate benchmark index. It is
most often applied to common stocks and mutual funds.
Coefficient of variation.
, Is the standard deviation divided by the mean return. Is a relative measure of risk (risk per unit
of return) and allows risk comparison among different investments,
Contrarian investment strategy.
Is buying securities that are out of favor and selling those that have become popular.
Core-satellite asset allocation.
When employed, the 70% to 80 % portion of the portfolio is invested in broad-based index funds
or exchange-traded funds while the remaining portion consists of actively managed mutual
funds in niches such as sector funds in energy and health care, REITS, emerging markets
funds, or international small-cap funds; and/or alternative investments such as hedge funds,
private equity funds, and managed futures/commodity funds. The satellite portion attempts to
generate above-average returns and/or to provide additional diversification to the core portfolio.
Correlation coefficient (correlation).
Is a relative measure of the degree to which the returns of two assets move together.
Correlations range between +1.0 to -1.0
Corporation.
An entity of indeterminate life owned by one or more parties. Ownership is evidenced by shares
of stock, each representing a fractional interest in the entity.
Defined benefit plan.
A qualified retirement plan that defines what the benefit will be at retirement. contribution
Defined contribution plan.
A qualified retirement plan that provides an individual account for each participant and specifies
the annual contributions that each employee receives (the benefits of each employee are based
upon the value of his or her account at retirement.
Distribution.
Any outflow from a retirement plan.
Dollar cost averaging.
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