Exam 13: Managing Your Own Portfolio

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A rational investor will require the same return from a corporate security as from a government security.

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Alex bought 100 shares of CBG corporation at $20 per share. It is now selling at $50 and Alex has placed a stop loss order at $47.50, good til canceled. Which of the following is true?

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The S & P 500 Index is an appropriate benchmark for

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Dollar cost averaging is likely to work best with a mutual fund

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Dollar-cost averaging plans and constant-dollar plans are both formula approaches to portfolio management. Briefly explain the two plans.

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Capital losses up to $5,000 on stock sales can be used to offset the taxes on ordinary income.

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Jessica's portfolio consists of 30% common stock, 40% bonds, 15% foreign securities and 15% short-term securities. This asset allocation would be considered

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The Sharpe's measure for Jane Smith's investment portfolio is 0.40, while the Sharpe's measure for the market is 0.30. This information suggests that Smith's portfolio

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Which of the following are reasons to consider selling an investment that is currently in a portfolio? I. The investment has met the original objective. II. Better investment opportunities currently exist. III. The outlook for the investment has improved. IV. The investment has not met expectations and no change is expected.

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Dollar cost averaging is a formula plan to purchase the same number of shares of stock at regular intervals of time.

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Treynor's measure of portfolio performance focuses on

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Net asset values at the end of each month for the no-load Currier & Ives fund are shown below. Holly Tannenbaum invests $500 in the fund each month through an automatic investment plan. Compute: a. the number of shares purchased each month b. the number of shares she owns at the end of December c. the average price of the shares over the period d. the average price per share paid by Holly Month NAV end of month Shares purchased July 12.85 August 11.08 September 9.99 October 9.85 November 13.55 December 12.21

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A stop-loss order guarantees that an investor's unrealized profit will be protected.

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Several indexes are available to monitor the performance of stocks, but nothing similar is available for bonds or mutual funds.

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One important tax rule concerning capital losses is that

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Portfolio revision is the ongoing process of systematically studying the issues in the portfolio and selling certain issues and purchasing others as the means of maintaining a portfolio that best meets the investor's objectives.

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Allison's portfolio has an expected return of 14% and a standard deviation of 20%. Brianna's portfolio has an expected rate of return of 11% and a standard deviation of 12%. The risk-free rate is 3%. According to the Sharpe measure,

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Twelve months ago, Javier purchased a stock for $28 a share. The stock pays a quarterly dividend of $0.45 per share. Today, Javier sold the stock for $26.75 a share. What is his holding period return?

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The holding period return for mutual funds should be based on

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Most investment professionals consider the Dow Jones Industrial Average (DJIA) to be the most appropriate comparative gauge for evaluating the investment performance of a broadly based common stock portfolio.

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