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[BCAA] Board Certified in Asset Allocation Practice Exam
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Exam Content Outline for Board Certified in Asset Allocation (BCAA): 1. Fundamentals of Asset Allocation o Introduction to Asset Allocation:  Definition and importance in investment strategy.  Historical perspectives and evolution of asset allocation theories. o Modern Portfolio Theory (...

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  • 29 de enero de 2025
  • 6 de febrero de 2025
  • 112
  • 2024/2025
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  • bcaa board certified in asset allocation practic

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[BCAA] Board Certified in Asset
Allocation Practice Exam

 1. Which of the following best describes Strategic Asset Allocation?
 A. Making short-term adjustments based on market conditions.
 B. Setting long-term target allocations and rebalancing periodically.
 C. Continuously adjusting the asset mix in response to market changes.
 D. Combining passive core investments with active satellite positions.
 Answer: B
 Explanation: Strategic Asset Allocation involves setting long-term target allocations for
different asset classes and periodically rebalancing the portfolio to maintain these desired
allocations.


 2. What is the primary purpose of rebalancing in Strategic Asset Allocation?
 A. To capitalize on short-term market inefficiencies.
 B. To adjust the asset mix based on economic forecasts.
 C. To maintain the desired long-term target allocations.
 D. To shift investments from core to satellite positions.
 Answer: C
 Explanation: Rebalancing is done to ensure that the portfolio remains aligned with the
long-term target allocations set in Strategic Asset Allocation, despite market fluctuations.


 3. Tactical Asset Allocation differs from Strategic Asset Allocation primarily
because it:
 A. Focuses on long-term investment horizons.
 B. Utilizes a core-satellite approach.
 C. Involves short-term adjustments based on market conditions.
 D. Sets fixed asset allocations without changes.
 Answer: C
 Explanation: Tactical Asset Allocation involves making short-term adjustments to the
asset mix based on current market conditions or opportunities, unlike Strategic Asset
Allocation which focuses on long-term targets.


 4. Which strategy involves opportunistic shifts to capitalize on market
inefficiencies?
 A. Strategic Asset Allocation
 B. Tactical Asset Allocation
 C. Dynamic Asset Allocation
 D. Core-Satellite Approach
 Answer: B
 Explanation: Tactical Asset Allocation includes making opportunistic shifts in the
portfolio to take advantage of perceived market inefficiencies.

,[BCAA] Board Certified in Asset
Allocation Practice Exam


 5. Dynamic Asset Allocation is best characterized by:
 A. Setting fixed long-term asset targets.
 B. Combining passive and active investment strategies.
 C. Continuous adjustment of the asset mix in response to market changes.
 D. Making one-time adjustments based on initial market analysis.
 Answer: C
 Explanation: Dynamic Asset Allocation involves continuously adjusting the asset mix as
market conditions and economic indicators change, allowing the portfolio to respond
promptly to new information.


 6. In the Core-Satellite Approach, the 'core' typically refers to:
 A. High-risk, high-return investments.
 B. Passive investments representing the bulk of the portfolio.
 C. Active investments aimed at outperforming the market.
 D. Short-term trading strategies.
 Answer: B
 Explanation: In the Core-Satellite Approach, the 'core' consists of passive, stable
investments that make up the majority of the portfolio, while 'satellites' are active
positions designed to enhance returns.


 7. What is a key benefit of the Core-Satellite Approach in asset allocation?
 A. It eliminates the need for portfolio rebalancing.
 B. It allows for balancing stability and growth potential.
 C. It focuses solely on short-term market trends.
 D. It requires minimal diversification.
 Answer: B
 Explanation: The Core-Satellite Approach balances stability (through passive core
investments) and growth potential (through active satellite positions), allowing for both
consistent performance and the opportunity to outperform.


 8. Which of the following is NOT a characteristic of Strategic Asset Allocation?
 A. Setting long-term target allocations.
 B. Making frequent short-term adjustments.
 C. Rebalancing to maintain desired allocation.
 D. Focusing on the long-term investment horizon.
 Answer: B
 Explanation: Strategic Asset Allocation involves setting long-term targets and
periodically rebalancing, but does not involve frequent short-term adjustments, which are
characteristic of Tactical Asset Allocation.

,[BCAA] Board Certified in Asset
Allocation Practice Exam


 9. Which asset allocation strategy is most likely to incorporate economic indicators
and forecasts?
 A. Strategic Asset Allocation
 B. Tactical Asset Allocation
 C. Dynamic Asset Allocation
 D. Core-Satellite Approach
 Answer: C
 Explanation: Dynamic Asset Allocation involves adjusting the asset mix based on
economic indicators and forecasts to respond to changing market conditions.


 10. Rebalancing a portfolio to its original asset allocation after significant market
movement is an example of which strategy?
 A. Tactical Asset Allocation
 B. Strategic Asset Allocation
 C. Dynamic Asset Allocation
 D. Core-Satellite Approach
 Answer: B
 Explanation: Rebalancing to maintain the original asset allocation aligns with Strategic
Asset Allocation, which seeks to maintain long-term target allocations despite market
movements.


 11. Short-term adjustments to a portfolio based on anticipated market trends are
characteristic of:
 A. Strategic Asset Allocation
 B. Tactical Asset Allocation
 C. Dynamic Asset Allocation
 D. Core-Satellite Approach
 Answer: B
 Explanation: Tactical Asset Allocation involves making short-term adjustments to the
portfolio based on anticipated market trends or conditions.


 12. Which asset allocation approach seeks to maximize returns by actively managing
a portion of the portfolio?
 A. Strategic Asset Allocation
 B. Tactical Asset Allocation
 C. Dynamic Asset Allocation
 D. Core-Satellite Approach
 Answer: D
 Explanation: The Core-Satellite Approach involves a stable core of passive investments
combined with actively managed satellite positions aimed at maximizing returns.

, [BCAA] Board Certified in Asset
Allocation Practice Exam


 13. What distinguishes Dynamic Asset Allocation from Tactical Asset Allocation?
 A. Dynamic focuses on long-term targets, Tactical on short-term.
 B. Dynamic involves continuous adjustment, while Tactical involves periodic
adjustments.
 C. Dynamic uses passive investments, Tactical uses active.
 D. Dynamic does not respond to economic indicators, Tactical does.
 Answer: B
 Explanation: Dynamic Asset Allocation involves continuous adjustments to the asset
mix in response to market changes, whereas Tactical Asset Allocation involves periodic
or opportunistic adjustments.


 14. The strategy of maintaining a fixed asset allocation regardless of market
conditions is best described as:
 A. Strategic Asset Allocation
 B. Tactical Asset Allocation
 C. Dynamic Asset Allocation
 D. Core-Satellite Approach
 Answer: A
 Explanation: Strategic Asset Allocation involves maintaining a fixed long-term asset
allocation and rebalancing as needed, rather than adjusting based on short-term market
conditions.


 15. Which asset allocation strategy is most aligned with buy-and-hold investing?
 A. Strategic Asset Allocation
 B. Tactical Asset Allocation
 C. Dynamic Asset Allocation
 D. Core-Satellite Approach
 Answer: A
 Explanation: Strategic Asset Allocation aligns with buy-and-hold investing as it
involves setting long-term targets and maintaining them over time, regardless of short-
term market fluctuations.


 16. Opportunistic shifts in asset allocation to exploit perceived short-term market
opportunities are part of which strategy?
 A. Strategic Asset Allocation
 B. Tactical Asset Allocation
 C. Dynamic Asset Allocation
 D. Core-Satellite Approach
 Answer: B

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