One of your clients has the following portfolio: - 28% LMN Utilities Incorporated - 35% OPQ Health Providers Incorporated - 32% Index ETF (Tracks S&P 100) - 5% Cash Equivalents / Money Market Funds Of the following types of risks, which is MOST important
This client should be informed that a substantial amount of non-systematic risk exists in this portfolio, because the client is so heavily invested in only two securities (63% of the portfolio is invested in LMN and OPQ). This is the MOST important risk t
Of the choices listed, which would be considered to be the most appropriate investment choices for a Senior Investor?
I.
U.S. Government Bonds
II. Deferred Variable Annuity
III. U.S. Savings Bond
IV.
Immediate Variable Annuity
A deferred Variable Annuity would not be appropriate for a Senior Investor since they are a "deferred" investment program designed for a younger or middle-aged investor. U.S. Savings Bonds would not be appropriate for Senior Investors since the owner will
A customer investing in a portfolio of speculative growth stocks would be most susceptible to which two of the following risks?
I. Interest rate risk.
II. Purchasing power risk.
III.
Systematic risk.
IV.
Default risk.
Interest rate risk occurs, for example, when an investor purchases long-term bonds at a low interest rate, and then interest rates increase. Purchasing power risk is the same as inflationary risk. Speculative growth stocks would be susceptible to both sys
Common Stock
Growth, capital appreciation
Long term
market risk
outpace inflation
Preferred Stock
Income, long-term
#1 risk is inflation
Corporate bond
Income, long-term
Risk- inflation
Treasuries (notes, bonds)
Goals: safety (capital preservation) & income
Risk: inflation
*TIPS
Muni Bonds
Tax free income
Risk- inflation
CMO
Monthly income
Risks: inflation, plus extension and prepayment
T-Bills, Money- Market, Commercial Paper
Safe, liquid, short-term, no income
During a discussion with a client to determine investment objectives, a client indicates a strong desire to preserve capital. The client also would like to see some current income from their investments. Which portfolio recommendation would BEST suit this
An investor that wants current income and preservation of capital would choose investments that are short and mid-term in nature and focused in government securities and money market instruments. A customer who mentions preservation of capital is interest
You are talking to a client who is making a few changes to their account information. The client recently retired. The client has a need for taxable monthly income from investments and would like to keep their investments conservative in nature. Which of
Of the choices offered, the least appropriate would be the leveraged bond fund because it would carry the greatest risk. All of the choices would be appropriate for a conservative retired person.