Exam 13: Managing Your Own Portfolio

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

Which one of the following provides the greatest reduction in total risk?

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

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.

The fixed-weightings approach to asset allocation

The key areas to monitor when evaluating your portfolio holdings are the overall performance of both the economy and the financial markets, and the returns on your investments.

The theory behind the variable ratio plan is to

Investors who use formula plans believe that they have above average ability to time the market and pick successful investments.

The Witney Growth Fund, a no-load mutual fund, had a net asset value per share of $54.28 one year ago.Its current net asset value is $56.93.During the year it paid out dividends and capital gains of $2.08 per share.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?

The best index to assess the performance of a portfolio diversified among several asset classes such as stocks, bonds and real estate is

Only capital gains that have been realized should be included in the measurement of a portfolio's return over a given period of time.

A conservative asset allocation would rely heavily on bonds and short-term securities.

The holding period return for mutual funds should be based on

The formula plan which requires the greatest management attention and is also the most aggressive is called the ________ plan.

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

A portfolio has a total return of 10.5%, a beta of 0.72 and a standard deviation of 6.3%.The risk free rate is 3.8%, the market return is 12.4%.Jensen's measure of this portfolio's performance is

A constant ratio plan allows for speculative gains while limiting potential losses.

Successful portfolio management with a variable ratio plan depends on the investor's skill in timing the market.

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

Which of the following statements about Jensen's measure are correct? I.Through its use of the capital asset pricing model, Jensen's measure automatically adjusts for market return. II.In general, the higher the Jensen's measure, the better a portfolio has performed. III.Jensen's measure is referred to as alpha. IV.A positive Jensen's measure indicates an investment has underperformed the market on a risk-adjusted basis.