Active portfolio management involves:Holding investments long-term without changesFrequent buying and selling to outperform the marketInvesting only in government securitiesAvoiding all high-risk investments40. Portfolio managers use asset allocation to:Minimize regulatory oversightBalance risk and returnAvoid all risksIncrease short-term gains41.  Alternative Investment Funds typically include:Mutual fundsHedge fundsSavings accountsFixed deposits42. Private equity investments involve:Buying public stocksInvesting in government bondsInvesting directly in private companiesTrading derivatives43. AIFs are suitable for:Risk-averse investorsConservative investorsHigh net worth individualsGeneral public44.  Hedge funds are known forLow-risk investmentsAggressive investment strategiesGuaranteed returnsFixed interest payments45. A key characteristic of AIFs is:Higher risk and potential for higher returnsGovernment backingGuaranteed returnsDaily liquidity

Semi-active management is focused on: O a. Taking small, calculated bets to outperform a targeted index on a net of fees basis • b. Using fundamental analysis to identify stocks likely to outperform O c. Tax-efficient outcomes • d. Maximising portfolio liquidity O e. Protecting capital in risk-off environments

Investment And Portfolio Management

What will a traditional portfolio manager most likely manage? Select all that apply.Review LaterMutual FundPension FundDistressed FundVenture Capital

An investment philosophy is best defined asa. An approach to active managementb.A set of core beliefs that are used to develop and execute an investment strategyc.A strategy used to implement an asset allocation and security selection programd.Only of relevance to institutional investors.e. None of the options are correct.

5. The conclusions of the CAPM suggest that investors would be best served by passively investing in an inexpensive broad-based index (as a poxy for the Market Portfolio) and use leverage to adjust for their level of risk aversion. However, more costly active portfolio management remains very popular to this day. Select the following statement that is most correct regarding the alpha generated in active investing  a. The laws of probability suggest that a good percentage of managers will be lucky over an extended period of time and consistently generate positive alpha  b. Markets are not perfectly efficient, so the skill of the active manger still plays an important role in stock selection and in portfolio construction  c. Current factor models, such as Fama-French, that offset the biases in cap weighted indices with other factors have been shown to eliminate alpha  d. a. and b. are both correct  e.a., b., and c. are all correct