Questions and Answers of Investment Analysis Portfolio

The annualized after-tax post-liquidation return calculated by Chen is closest to:A. 4.41%.B. 5.62%.C. 5.92%.Jevan Chen is a tax adviser who provides tax-aware advice to various private clients. Two
The after-tax wealth in Kaminski’s tax-deferred account at the end of the five years will be closest to:A. $$1$,122,041.B. $$1$,313,166.C. $$1$,402,552.Jevan Chen is a tax adviser who
Discuss why Wacho’s recommended decumulation strategy is the more tax-efficient strategy.Wacho and Ka next discuss tax loss harvesting and tax lot accounting for one of Ka’s other accounts. Ka
Determine the tax lot that would be most tax efficient to sell given Ka’s chosen tax lot accounting method. Calculate the tax liability/benefit from the sale.Today is 23 August 20X3, and Ka sells
Discuss four important risk and tax-related considerations that are relevant to Omo’s portfolio.With most of Omo’s personal net worth tied up in his software company, he is asset rich but cash
Determine the most appropriate strategy that can generate liquidity and accomplish Omo’s goals. Justify your response.Jing asks Omo about his plans for the shares of his previous employer’s
Recommend a strategy, alternative to an outright sale of the shares, that will satisfy Omo’s goals and alleviate his concern.Tesando Omo is a highly successful entrepreneur. The software company
Discuss two estate planning objectives revealed in Hinkle’s discussion with Enlow.Enlow wants to transfer some of his wealth to his niece and nephew but isn’t sure whether he should use lifetime
Recommend, for both Enlow’s niece and nephew, the most tax-efficient wealth transfer option (lifetime gift or testamentary bequest). Show your calculations. Recommend, for both Enlow's niece and
Which of Boulder’s observations regarding Maglav’s pension plan is correct?A. Only Observation 1 B. Only Observation 2 C. Both Observation 1 and Observation 2 William Azarov is a portfolio
Which of the benefits of outsourcing the management of the pension plan suggested by Boulder is correct?A. Benefit 1 B. Benefit 2 C. Benefit 3 William Azarov is a portfolio manager for Westcome
Westcome’s investment approach for Maglav’s pension plan can be best characterized as the:A. Norway model.B. Canadian model.C. endowment model.William Azarov is a portfolio manager for Westcome
The risk tolerance of Maglav’s pension plan can be best characterized as being:A. below average.B. average.C. above average.William Azarov is a portfolio manager for Westcome Investments, an asset
Based on Azarov’s statement concerning ERISA and ASC 715, which of the following statements is correct?A. Maglav is not allowed to terminate the plan.B. Maglav can exclude the plan’s service
The risk tolerance of the Wolf University Endowment Fund can be best characterized as:A. below average.B. average.C. above average.William Azarov is a portfolio manager for Westcome Investments, an
Which proposed allocation in Exhibit 1 would be most appropriate for the Fund given its characteristics?A. Allocation 1 B. Allocation 2 C. Allocation 3 William Azarov is a portfolio manager for
Identify the investment approach currently being used by the Investment Committee for managing the Fund. Justify your response.Bern Zang is the recently hired chief investment officer of the Janson
Discuss the advantages and the disadvantages of the investment approach currently being used by the Investment Committee.Bern Zang is the recently hired chief investment officer of the Janson
Describe how each of the following common characteristics of institutional investors supports the Fund’s allocation to private real estate:i. Scale ii. Investment horizon iii. Governance
Identify the new investment approach proposed by Zang for managing the Fund.Justify your response.Bern Zang is the recently hired chief investment officer of the Janson University Endowment
Discuss the advantages and the disadvantages of the new investment approach proposed by Zang.Bern Zang is the recently hired chief investment officer of the Janson University Endowment Investment
Fiona Heselwith is a 40-year-old US citizen who has accepted a job with Lyricul, LLC, a UK-based company. Her benefits package includes a retirement savings plan. The company offers both a defined
Dianna Mark is the chief financial officer of Antiliaro, a relatively mature textile production company headquartered in Italy. All of its revenues come from Europe, but the company is losing sales
Formulate the investment objectives section of the investment policy statement for the Endowment.Prometheo University recently hired a new chief investment officer (CIO). The CIO directs her small
Discuss whether the current investment policy is appropriate given the Endowment’s annual spending policy.Upon completion of the investment policy review by her four-person staff, the CIO makes
Determine whether the board should accept the CIO’s recommendation. Justify your response.The Prometheo University Scholarship Endowment (the Endowment) was established in 1950 and supports
Meura Bancorp, a US bank, has an equity capital ratio for financial assets of 12%.Meura’s strategic plans include the incorporation of additional debt in order to leverage earnings since the
An investor is considering adding three new securities to her internationally focused, fixed-income portfolio. She considers the following non-callable securities:• 1-year government bond•
Jo Akumba’s portfolio is invested in a range of developed markets fixed-income securities. She asks her adviser about the possibility of diversifying her investments to include emerging and
An Australian investor currently holds an A$240 million equity portfolio. He is considering rebalancing the portfolio based on an assessment of the risk and return prospects facing the Australian
An analyst is reviewing various asset alternatives and is presented with the following information relating to the broad equity market of Switzerland and various industries within the Swiss market
Identify risks faced by investors in emerging market equities over and above those that are faced by fixed-income investors in such markets.
Describe the main issues that arise when conducting historical analysis of real estate returns.
An analyst at a real estate investment management firm seeks to establish expectations for rate of return for properties in the industrial sector over the next year. She has obtained the following
A client has asked his adviser to explain the key considerations in forecasting exchange rates. The adviser’s firm uses two broad complementary approaches when setting expectations for exchange
Looking independently at each of the economic observations below, indicate the country where an analyst would expect to see a strengthening currency for each observation. Expected inflation over next
Fap is a small country whose currency is the Fip. Three years ago, the exchange rate was considered to be reflecting purchasing power parity (PPP). Since then, the country’s inflation has exceeded
Which of the real estate portfolio manager’s statements is correct?A. Only Statement 1 B. Only Statement 2 C. Both Statement 1 and Statement 2 Richard Martin is chief investment officer for the
Based only on Exhibit 1, the long-run expected return for commercial real estate:A. is approximately double the cap rate.B. incorporates a cap rate greater than the discount rate.C. needs to include
Based on the private real estate model developed to estimate return volatility, the true variance is most likely:A. lower than the variance of the observed data.B. approximately equal to the variance
Based on Exhibit 2 and the anticipated effects of the monetary policy change, the expected annual return over a three-year investment horizon will most likely be:A. lower than 2.00%.B. approximately
Based on the building block approach to fixed-income returns, the dominant source of the yield spread for Country XYZ is most likely the:A. term premium.B. credit premium.C. liquidity premium.Richard
Using the building block approach, the required rate of return for the ZMC bond will most likely:A. increase based on the change in the credit premium.B. decrease based on the change in the
Based only on Exhibit #3, the foundation would most likely consider buying bonds issued by:A. only Emerging Republic A.B. only Emerging Republic B.C. neither Emerging Republic A nor Emerging Republic
Based only on Exhibits 3 and 4 and the information provided by the portfolio managers, the action most likely to enhance returns is to:A. decrease existing investments in real estate by 2.00%.B.
Which of the following statements made by Bader’s research assistant is correct?A. Statement 1 B. Statement 2 C. Statement 3 Judith Bader is a senior analyst for a company that specializes in
Based on expectations for changes in integration with the global market, all else being equal, the Singer–Terhaar model implies that Bader should shift capital from Country A to:A. only Country
Using the Grinold–Kroner model, which of the following assumptions for forecasting Country A’s expected equity returns is plausible for the very long run?A. Rate of net share repurchases B.
Based only on the emerging markets discussion, developments in which of the following areas most likely signal increasing risk for Country B’s equity market?A. Politics B. Competitiveness C.
Based on Bader’s expectations for current account secular trends as shown in Exhibit 1, Bader should reallocate capital, all else being equal, from:A. Country A to Country C.B. Country B to Country
Based on Bader’s inflation expectations as shown in Exhibit 1, purchasing power parity implies that which of the following countries’ currencies should depreciate, all else being equal?A. Country
Based on Exhibit 1, which country’s central bank is most likely to buy domestic bonds near term to sterilize the impact of money flows on domestic liquidity?A. Country A B. Country B C. Country C
Based on the composition of each country’s currency portfolio, which country is most vulnerable to a potential crisis?A. Country A B. Country B C. Country C Judith Bader is a senior analyst for a
Using the economic balance sheet approach, the Laws’ economic net worth is closest to:A. $$925$,000.B. $$1$,425,000.C. $$1$,675,000.Meg and Cramer Law, a married couple aged 42 and 44,
Using an economic balance sheet, which of the Laws’ current financial assets is most concerning from an asset allocation perspective?A. Equities B. Real estate C. Fixed income Meg and Cramer Law, a
Raye believes the previous adviser’s specification for debt is incorrect given that, for purposes of asset allocation, asset classes should be:A. diversifying.B. mutually exclusive.C. relatively
Raye believes the previous adviser’s asset class specifications for equity and derivatives are inappropriate given that, for purposes of asset allocation, asset classes should be:A. diversifying.B.
To address his concern regarding the previous adviser’s asset allocation approach, Raye should assess the Laws’ portfolio using:A. a homogeneous and mutually exclusive asset class–based risk
Based on Exhibit 1, which portfolio best meets the Laws’ education goal for their children?A. Portfolio 1 B. Portfolio 2 C. Portfolio 3 Meg and Cramer Law, a married couple aged 42 and 44,
Based on Exhibit 1, which portfolio best meets the Laws’ goal to fund an endowment for their alma mater?A. Portfolio 1 B. Portfolio 2 C. Portfolio 3 Meg and Cramer Law, a married couple aged 42 and
Raye’s approach to rebalancing global equities is consistent with:A. the Laws being risk averse.B. global equities having higher transaction costs than other asset classes.C. global equities having
The asset allocation in Exhibit 1 most likely resulted from a mean–variance optimization using:A. historical data.B. reverse optimization.C. Black–Litterman inputs.Megan Beade and Hanna Müller
For clients concerned about rebalancing-related transactions costs, which of Beade’s suggested changes in the corridor width of the rebalancing policy is correct? The change with respect to:A.
Based on Beade’s interest rate expectations, the pension plan’s funding ratio will:A. decrease.B. remain unchanged.C. increase.Megan Beade and Hanna Müller are senior analysts for a large,
Based on Exhibit 2, which portfolio provides the greatest objective function expected value?A. Portfolio 1 B. Portfolio 2 C. Portfolio 3 Megan Beade and Hanna Müller are senior analysts for a large,
The asset allocation approach most appropriate for client Kealoha is best described as:A. a surplus optimization approach.B. an integrated asset–liability approach.C. a hedging/return-seeking
Based on Exhibit 3, which sub-portfolios best meet the two goals expressed by client Rodríguez?A. Sub-Portfolio A for Goal 1 and Sub-Portfolio C for Goal 2 B. Sub-Portfolio B for Goal 1 and
In the risk parity asset allocation approach that Müller uses, the weight that Müller places on domestic bonds should be:A. less than 25%.B. equal to 25%.C. greater than 25%.Megan Beade and Hanna
Which of Müller’s comments about the other approaches to asset allocation is correct?A. Comment 1 B. Comment 2 C. Comment 3 Megan Beade and Hanna Müller are senior analysts for a large,
Based on Exhibit 1 and the risk aversion coefficient, the preferred asset allocation for Perkins is:A. Asset Allocation A.B. Asset Allocation B.C. Asset Allocation C.Investment adviser Carl Monteo
In their discussion of the asset classes that Velky is interested in adding to the VP portfolio, Monteo should tell Velky that:A. these asset classes can be readily diversified to eliminate
Which of Velky’s statements about risk budgeting is correct?A. Statement 1 B. Statement 2 C. Statement 3 Investment adviser Carl Monteo determines client asset allocations using quantitative
Which of Chaterji’s criticisms of MVO is/are valid?A. Only Criticism 1 B. Only Criticism 2 C. Both Criticism 1 and Criticism 2 Investment adviser Carl Monteo determines client asset allocations
Which of the characteristics put forth by Chaterji to describe the factor-based approach is/are correct?A. Only Characteristic 1 B. Only Characteristic 2 C. Both Characteristic 1 and Characteristic 2
The change in the annual spending rate, in conjunction with the board’s expectations regarding future enrollment and the need for endowment support, could justify that KUE’s target weight for:A.
Which of Capara’s statements regarding tactical asset allocation is correct?A. Statement 1 B. Statement 2 C. Statement 3 Rebecca Mayer is an asset management consultant for institutions and
Based on Exhibits 1 and 2, to attempt to profit from the short-term excess return forecast, Capara should increase KUE’s portfolio allocation to:A. developed markets equity and decrease its
Given Koval’s current portfolio and the tax laws of the country in which he lives, Koval’s portfolio would be more tax efficient if he reallocated his taxable account to hold more:A. high-yield
Koval’s attitude toward emerging markets equity reflects which of the following behavioral biases?A. Hindsight bias B. Availability bias C. Illusion of control Rebecca Mayer is an asset management
In both of Mayer’s optimization scenarios, which of the following model inputs could be used without adjustment?A. Expected returns B. Correlation of returns C. Standard deviations of returns
Given the change in funding of Lara’s education, the Martins’ strategic asset allocation would most likely decrease exposure to:A. cash.B. bonds.C. equities.Elsbeth Quinn and Dean McCall are
The most appropriate asset allocation for the Martins’ new charitable gift sub-portfolio is:A. 40% equities/60% bonds.B. 70% equities/30% bonds.C. 100% equities/0% bonds.lsbeth Quinn and Dean
Which of Neal’s statements regarding the taxation of investments is correct?A. Statement 1 only B. Statement 2 only C. Both Statement 1 and Statement 2 lsbeth Quinn and Dean McCall are partners at
Given the Martins’ risk and tax preferences, the taxable portfolio should be rebalanced:A. less often than the tax-deferred portfolio.B. as often as the tax-deferred portfolio.C. more often than
During the rebalancing discussion, which behavioral bias does Neal exhibit?A. Framing bias B. Loss aversion C. Representativeness bias
Given McCall’s IPS recommendation, the most appropriate new strategic asset allocation for the KCPF is:A. 40% stocks/60% bonds.B. 65% stocks/35% bonds.C. 75% stocks/25% bonds.lsbeth Quinn and Dean
The proposal for short-term adjustments to the KCPF asset allocation strategy is known as:A. de-risking.B. systematic tactical asset allocation.C. discretionary tactical asset allocation.lsbeth Quinn
High ethical standards are distinguishing features of which of the following bodies?A. Craft guilds B. Trade bodies C. Professional bodies
Fiduciary duty is a standard most likely to be upheld by members of a(n):A. employer.B. profession.C. not-for-profit body.
To maintain trust, the investment management profession must be interdependent with:A. regulators.B. employers.C. investment firms.
When an ethical dilemma occurs, an investment professional should most likely first raise the issue with a:A. mentor outside the firm.B. professional body’s hotline.C. senior individual in the firm.
A correct description of fintech is that it:A. is driven by rapid growth in data and related technological advances.B. increases the need for intermediaries.C. is at its most advanced state using
In providing investment services, robo-advisers are most likely to:A. rely on their cost effectiveness to pursue active strategies.B. offer fairly conservative advice as easily accessible guidance.C.
Which of the following statements on fintech’s use of data as part of risk analysis is correct?A. Stress testing requires precise inputs and excludes qualitative data.B. Machine learning ensures
A factor associated with the widespread adoption of algorithmic trading is increased:A. market efficiency.B. average trade sizes.C. trading destinations.
A benefit of distributed ledger technology (DLT) favoring its use by the investment industry is its:A. scalability of underlying systems.B. ease of integration with existing systems.C. streamlining
What is a distributed ledger technology (DLT) application suited for physical assets?A. Tokenization B. Cryptocurrencies C. Permissioned networks
Wakuluk most likely seeks to mitigate which of the following biases in developing capital market forecasts?A. Availability B. Time period C. Survivorship
Wakuluk’s approach to economic forecasting:A. is flexible and limited in complexity.B. can give a false sense of precision and provide false signals.C. imposes no consistency of analysis across
Wakuluk is most likely to make significant adjustments to her estimate of the future growth trend for which of the following countries?A. Country Y only B. Country Z only C. Countries Y and Z

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