单项选择题

William Bonney, CFA, is writing an investment policy statement for one of his high net worth clients, Joey Rook. Rook is a retiree who receives Social Security benefits but because he was self-employed, has no pension income. He has a portfolio of $ 1.2 million and recently purchased a vacation cabin requiring mortgage and maintenance expenses of $ 6000 per month. After meeting with his client, Bonney writes the following policy statement: "The total return objective is to earn 6% after-tax. At no time should the principal amount decline in value by more than 15%." The most valid criticism of this return objective statement is that:

A. it considers only the after-tax return.
B. the return objective is too conservative and the risk allowed is unrealistically low in today’s market.
C. it fails to consider current income.

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单项选择题An analyst gathered the following information about two common stocks: Variance of returns for the Libby Company = 15.5 Variance of returns for the Metromedia Company = 22.3 Covariance between returns for the two common stocks is close to: The correlation coefficient between returns for the two common stocks is closest to:

A. 0.025.
B. 0.388.
C. 0.465.

单项选择题When setting investor objectives in the investment policy statement, expressing goals only in terms of returns can:

A. lead to inappropriate investment practices by the portfolio manager, such as the use of low-risk investment strategies.
B. distort the expected outcome.
C. lead to inappropriate investment practices by the portfolio manager, such as the use of high-risk investment strategies.