Level Five: Advanced Investing
Difficulty Level: High

 

1. This asset allocation approach strives for the greatest return for a given level of risk (or lowest risk for a given level of return). _____
   1. Core-Satellite Asset Allocation
   2. Tactical Asset Allocation
   3. Modern Portfolio Theory
   4. All of the above

 

2. The Sharpe Ratio is an industry standard measure for calculating _____
   1. Risk tolerance
   2. Risk-adjusted return
   3. Risk of inflation exceeding 2.5%
   4. None of the above

 

3. According to the efficient market hypothesis, stock prices _____
   1. Only benefit 8 percent of the most efficient investors
   2. Fully reflect all relevant information, making it impossible to "beat the market"
   3. Will go through equal numbers of increases and declines over time
   4. All of the above

 

4. An example of a non-diversifiable risk might be _____.
   1. Reinvestment rate risk
   2. Interest rate risk
   3. Currency risk
   4. All of the above

 

5. An R-squared value of 100 would indicate that all movements of a fund _____
   1. Act exactly like a given index
   2. Behave completely differently than a given index
   3. None of the above

Answers

1. c
2. b
3. b
4. d
5. a