Exam 13: Managing Your Own Portfolio

If an investor has a loss position in an investment and wants to sell it, the best time to sell for tax purposes is when a capital gain is available against which the loss can be applied.

One year ago, Matt bought 100 shares of ACE Corp. for $5,619 including commission. He is about to sell the ACE share for $6,528 net of commissions. When he made the purchase the ASX 300 index was at 907; now it is 1070. The beta of ACE share is 0.98, and the market's risk- free rate is 4.0%. No dividends were paid. Based on Jensen's measure, did Matt make a good purchase?

The two primary media for warehousing liquidity are

Investors who wish to minimise the effect of taxes on their investment returns should try to avoid

The Witney Growth Fund, a no- fee managed fund, had a net tangible asset value per unit of $54.28 one year ago. Its current net tangible asset value is $56.93. During the year it paid out dividends and capital gains of $2.08 per unit. It has a beta value of 1.75. Over the same period the market return was 6.4% and the risk- free rate of return was 3.5%. (a) Calculate Treynor's measure for the Witney Growth Fund. (Show all work.) (b) Based on Treynor's measure, how did the fund perform in relation to the overall market?

Allison's portfolio has an expected return of 14% and a beta of 1.37. Brianna's portfolio has an expected rate of return of 11% and a beta of 1. The risk- free rate is 3% and the expected rate of return on the market is 12%. According to the Jensen's measure,

Explain the type of risk measured by each of the following measures. Also identify the factor in each formula that determines the type of risk that is being measured. (a) Jensen's measure (b) Sharpe's measure (c) Treynor's measure

The formula plan that requires maintaining a target dollar investment in the speculative portion of an investor's portfolio is the

Most investment professionals consider the ASX 100 to be the most appropriate comparative gauge for evaluating the investment performance of a broadly based ordinary share portfolio.

The holding period return calculation for a portfolio time- weights portfolio additions and deletions in accordance with the number of months they were in the portfolio.

Dollar-cost averaging is a procedure by which an investor

Sharpe's measure of portfolio performance adjusts for risk by dividing total portfolio return by the portfolio beta.

The primary risk in using a GTC limit sell order rather than a market order is that

Which one of the following statements is correct concerning dollar-cost averaging plans?

An investment portfolio should be built around the needs of the individual investor.

An investor adopts a policy of investing in both an aggressive managed fund and a short- term bond fund. When the value of the aggressive fund exceeds 65% of the portfolio value, shares of that fund are sold such that the aggressive fund represents only 45% of the portfolio. This is an example of a_________ plan.

Sharpe's measure is a measure of the risk premium per unit of total risk.

On January 1, Tim's portfolio was valued at $432,098. During the year Tim received $10,563 in interest and $15,060 in dividends. He also sold shares at a net loss of $12,870 and used the proceeds to purchase another share. Tim did not contribute any more funds nor withdraw any funds during the year. On December 31 of the same year, Tim's portfolio was valued at $398,189. What is the holding period return for the year?

The general theory of dollar-cost averaging is

The constant- ratio plan