Choose wisely. There is only one correct answer to each question.
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1.
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.
2.
What should you expect from your mutual funds as you're monitoring them?
That they're still meeting your investment criteria. You want your funds to meet the same investment criteria today as they did when you first bought them. If they no longer meet your criteria, do they still belong in your portfolio?
3.
What should you do if your portfolio's returns fall short of your expected performance over a short period of time?
Don't panic, but do find out why your portfolio isn't meeting expectations--especially if your portfolio is suffering losses that are beyond your acceptable range. Your portfolio should average out to your expected return figure over time, not return that exact amount each and every year. But you should find out what's driving your portfolio's performance. And if your portfolio is actually losing more money than you thought it could, you may be taking on more risk than you think.
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.
Portfolios _______.
Both of the above. Portfolios can change without us doing anything to them. Market forces will make some investments perform better than others, which means they'll take up more of our assets. Or fund managers buy and sell securities, thereby changing the underlying portfolios of our mutual funds and, therefore, changing the look of our overall portfolios.
