Exam (elaborations)
CFA level 1 (portfolio management) Questions and Answers 100% Solved
- Course
- Institution
CFA level 1 (portfolio management)
[Show more]
Seller
Follow
julianah420
Reviews received
Content preview
CFA level 1 (portfolio management)algorithmic trading - answer the computerized buying and selling of financial
instruments, in accordance with pre-specified rules and guidelines
Dark Pools - answer electronic trading networks where participants can anonymously
buy or sell large blocks of alternative securities
robo-advising - answer suggests assets for a client but does not place the trades
Risk Budgeting - answer- quantifies and allocates the tolerable risk according to specific
metrics
- ex: beta, value at risk, scenario loss, etc...
Planning step.... - answer• Understanding the client's needs
• Preparation of an investment policy statement (IPS)
Execution step... - answer• Asset allocation
• Security analysis
• Portfolio construction
Feedback step... - answer• Portfolio monitoring and rebalancing
• Performance measurement and reporting
_______ impacts an individuals ability to take risk - answer- expected income
- time horizon
*personality impacts their willingness!
A portfolio with the greatest diversification has assets with a correlation of _____ -
answershould be negative! A positive correlation is bad for diversification, and 0 is fine
but not as diversified as a negative correlation
Bollinger Bands - answerconsist of a moving average price plus a higher line
representing the moving average plus a set number of standard deviations from the
average price and a lower line that is the moving average minus the same set number
of standard deviations.
Funds of hedge funds - answerFunds that hold a portfolio of hedge funds.
- Adds a layer of fees because each fund will charge a management fee plus an
incentive fee
- Due diligence expertise!
, - Very diversified!
The most conservative approach to valuing hedge fund positions is.... - answerBid
prices for longs and ask prices for shorts
Pros and cons of collectables as an investment - answerPros: Long term capital
appreciation, portfolio diversification
Con: Doesnt provide current income
Management fees for hedge funds vs private equity... - answer- Hedge funds are based
on only invested capital
- Private equity is based on committed capital!
Macro strategies - answerEmphasize a top-down approach, and trades are made based
on expected movements of economic variables
Relative value strategies - answerFocus on pricing discrepancies between related
securities
Event-driven strategies - answerFocus on short-term events that are expected to affect
individual companies (bottom up)
Green finance is an example of... - answerimpact investing
Dual class firms - answer- Proponents of dual-class structures argue that management
is better able to make long-term strategic investments that may have negative short-
term implications when control is wielded by a small group of shareholders with superior
voting rights.
- Trade at a discount to peers
A company's optimal capital budget most likely occurs at the intersection of the: -
answermarginal cost of capital and investment opportunity schedule.
With a fixed-rate non-callable bond, the before-tax cost of debt is the - answerbond's
yield to maturity.
Purpose of post-audit - answerTo explain any differences between the actual and
predicted results of a capital budgeting project. This can include indicating systematic
errors, improving business operations, and provide concrete ideas for future investment
opportunities
Country Equity Premium - answer(Sovereign yield spread)(Annualized standard
deviation of equity index/Annualized standard deviation of the sovereign bond market in
terms of the developed market currency)
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller julianah420. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $13.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
60904 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now