Fin 334 Ch. 13 Exam Questions With Verified Answers
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Course
Fin 334
Institution
Fin 334
Fin 334 Ch. 13 Exam Questions With
Verified Answers
1) Before analyzing needs and objectives, investors should first construct a portfolio. -
answerAnswer: FALSE
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2) A conservative asset allocation would rely heavily on bonds and short-term securities. -
answerAnswer: TRUE
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3) Utility sto...
7) Marti is 31 years old and is saving for retirement. Which one of the following portfolio
allocations might best suit her situation if she is willing to accept a fair amount of risk in
exchange for long-term capital appreciation - answer✔
A) 60% bonds, 15% money funds and 25% real estate
B) 5% money funds, 10% bonds and 85% growth stocks
C) 25% bank CDs, 40% corporate bonds, 15% money market, 20% value stocks
D) 50% mortgage bonds, 5% money market, 45% municipal bonds - answer✔Answer: B
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8) Asset allocation should focus on
A) the investor's financial and family situation.
B) selection of individual securities within an asset class.
C) maximization of current income.
D) maximization of short-term profits. - answer✔Answer: A
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9) An moderate asset allocation alternative might include
I. bonds.
II. common stocks.
III. foreign securities.
IV. options and commodities futures.
A) I & II only
B) I, III and IV only
C) I, II, and III only
10) Which one of the following provides the greatest reduction in total risk - answer✔
A) diversification
B) asset allocation
C) security selection
D) beta reduction - answer✔Answer: B
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11) The fixed-weightings approach to asset allocation
A) is based on an allocation of an equal percentage of the portfolio to each separate asset
category.
B) requires periodic rebalancing of the portfolio to maintain the desired weights.
C) is based on periodic adjustments to category weights in response to market changes.
D) uses stock-index futures and bond futures in a market timing strategy. - answer✔Answer: B
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12) An asset allocation plan should consider which of the following factors - answer✔
I. economic outlook
II. capital preservation
III. changing investment goals
IV. investor risk tolerance
A) II only
B) II, III and IV only
C) I, III and IV only
D) I, II, III and IV - answer✔Answer: D
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