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Free CFA Portfolio Management Practice Questions & Answers

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Question 721

A sovereign wealth fund's spending policy is 4% of assets per year. If assets are $500 billion and the fund earns 7% nominal return, by how much do assets grow?

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Question 722

An investor expects to receive $200,000 in 10 years. If the discount rate is 6%, what is the present value?

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Question 723

The information ratio of a portfolio is 0.75 and the tracking error is 8%. The active return is:

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Question 724

An investor reports that regardless of market conditions, they never sell any holdings. This most likely reflects:

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Question 725

A portfolio manager who follows a written rebalancing policy regardless of market conditions is most directly addressing which behavioral bias?

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Question 726

The 'planning' phase of portfolio management would best be followed by which of these next steps?

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Question 727

Which type of investor is MOST likely to have a mandate that prohibits speculative-grade investments?

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Question 728

The primary reason that passive investing has grown significantly in recent decades is:

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Question 729

An investor says: 'I believe stocks in my home country will always outperform foreign stocks because I know them better.' This investor is most likely exhibiting:

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Question 730

According to modern portfolio theory, the optimal portfolio for every investor:

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Question 731

Which of the following behavioral biases is most directly related to investors trading too frequently?

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Question 732

An investor chooses to hold a highly concentrated stock position inherited from a family estate, despite poor diversification. This is most likely driven by:

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Question 733

Which of the following performance measurement errors would most UNDERMINE the reliability of Jensen's alpha as a skill measure?

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Question 734

The 'feedback' loop in portfolio management ensures that:

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Question 735

Which type of pooled fund typically imposes 'lock-up' periods during which investors cannot redeem?

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Question 736

An investor who refuses to sell any investment because 'they might go up later' is most likely exhibiting:

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Question 737

In the context of risk management, 'risk budgeting' is most closely analogous to:

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Question 738

A financial planner tells a client that her portfolio should target a 7% nominal return, assuming 3% inflation. The implied real return target is approximately:

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Question 739

The most important consideration when comparing the performance of two portfolio managers is:

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Question 740

Which of the following behavioral interventions is most effective for reducing the impact of overconfidence in portfolio decisions?

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Question 741

The concept of 'absolute return' investing targets:

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Question 742

An investor who is risk averse will:

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Question 743

The variance of a single asset's returns measures:

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Question 744

The standard deviation of a portfolio is most accurately described as:

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Question 745

When two assets have a correlation of +1.0, combining them in a portfolio:

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Question 746

As the number of assets in a portfolio increases, which type of risk approaches zero?

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Question 747

The covariance between two assets is positive. This means:

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Question 748

An indifference curve in mean-variance space represents:

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Question 749

For a risk-averse investor, indifference curves in the mean-return vs. standard deviation space are:

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Question 750

The minimum-variance portfolio on the efficient frontier is:

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Free CFA Portfolio Management Practice Questions & Answers

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