Choose wisely. There is only one correct answer to each question.
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1.
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?
2.
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.
3.
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.
4.
The best way to put an investment's performance into context is to compare its returns to those of _______.
An appropriate benchmark. Compare the returns of your investments to the benchmark you chose.
5.
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.
