1. 10 d
2. Please write down the appropriate answer (example: (ii)b if the correct answer is (b) for question (ii)),.

1. According to the fundamental ethical and professional principles applicable to the investment industry, which group should have its interests ranked first?

(a) Clients

(b) Employers

(c) Co-workers

1. The possibility that a portfolio manager will lose money because the bond valuation model he uses is flawed is an example of:

(a) operational risk

(b) investment risk

(c) compliance risk

1. A fund manager does not compare his portfolio with the benchmark in terms of:

(a) performance

(b) composition

(c) fees

1. A fund manager's alpha is the part of the fund's return that can be attributed to:

(a) the market

(b) skill

(c) luck

1. Which one of the following is considered an institutional investor?

(a) Accredited investor

(b) Sovereign wealth fund

(c) A managed account

1. Diversification will not help reduce a portfolio's:

(a) systematic risk

(b) specific risk

(c) overall risk

1. Compared with passive investment, active investment management involves:

(a) tracking a benchmark

(b) market timing

(c) lower transaction costs

(7 marks)