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L3 10 Managing Individual Investor Portfolios > l prepare and justify an investment policy statement for an individual investor; > Flashcards

l prepare and justify an investment policy statement for an individual investor; Flashcards

L3 10 Managing Individual Investor Portfolios (14 decks)

a discuss how source of wealth, measure of wealth, and stage of life affect an individual investors’ risk tolerance;

b explain the role of situational and psychological profiling in understanding an individual investor;

c compare the traditional finance and behavioral finance models of investor decision making;

d explain the influence of investor psychology on risk tolerance and investment choices;

e explain the use of a personality typing questionnaire for identifying an investor’s personality type;

f compare risk attitudes and decision- making styles among distinct investor personality types, including cautious, methodical, spontaneous, and individualistic investors;

g explain potential benefits, for both clients and investment advisers, of having a formal investment policy statement;

h explain the process involved in creating an investment policy statement;

i distinguish between required return and desired return and explain how these affect the individual investor’s investment policy;

j explain how to set risk and return objectives for individual investor portfolios and discuss the impact that ability and willingness to take risk have on risk tolerance;

k discuss each of the major constraint categories included in an individual investor’s investment policy statement;

l prepare and justify an investment policy statement for an individual investor;

m determine the strategic asset allocation that is most appropriate for an individual investor’s specific investment objectives and constraints;

n compare Monte Carlo and traditional deterministic approaches to retirement planning and explain the advantages of a Monte Carlo approach.

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