Choose wisely. There is only one correct answer to each question.
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1.
If a mutual fund no longer meets one of your investment criteria, should you sell it?
Maybe, maybe not. It becomes a more important issue once it no longer meets most of your criteria.
2.
What is the danger in letting the strongest performers of your portfolio stay in there and continue performing, as opposed to regular rebalancing?
It increases the overall risk level, which can magnify losses during a downturn. And that means you might not meet the goals for which you are investing in the first place.
3.
When monitoring your investment portfolio, you would be wise to _______.
Develop a set of monitoring procedures. Approach your portfolio scientifically with a set of procedures, goals, and criteria.
4.
If you've created an investment policy statement, you will have addressed which of these portfolio-monitoring issues?
All of the above. If you've created an investment policy statement, you will have addressed these questions and many others.
5.
The best way to put an investment's performance into context is to compare its returns to those of other investments in your portfolio.
False. The best way to do it is to compare its returns to an appropriate benchmark.
