What is the main goal of portfolio management?
Portfolio management aims to achieve the best return on investment based on a client’s risk tolerance and financial goals.
What is asset allocation?
Asset allocation involves dividing investments among different asset classes to manage risk and meet investment goals.
Why is diversification important in portfolio management?
Diversification helps reduce the risk of large losses by investing in different types of assets.
What is rebalancing in portfolio management?
Rebalancing involves adjusting a portfolio back to its target asset allocation to maintain the desired risk level.
Which asset class is typically considered the most volatile?
Equities are known for their high return potential but also greater price volatility compared to other assets.
What is the purpose of risk profiling?
Risk profiling helps determine an investor’s ability and willingness to take risks, guiding investment strategies.
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What is the benefit of a long-term investment horizon?
A long-term horizon can reduce the impact of market volatility and increase compounding benefits.
What is strategic asset allocation?
Strategic asset allocation is a long-term approach to set target allocations and periodically rebalance the portfolio.
Which of the following represents an alternative asset?
Alternative assets include investment types like commodities, hedge funds, and private equity, outside traditional stocks and bonds.