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Portfolios 108: Creating Your Investment Policy Statement

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1.
What benchmark is most appropriate for a portfolio that is 50% invested in U.S. large-company stocks, 25% in bonds, and 25% in foreign stocks?
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A customized benchmark that combines U.S. large-company, bond, and foreign-stock indexes. Choose benchmarks for your portfolio that reflect the makeup of your portfolio.
2.
When buying or selling securities, _______.
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Your actions should reflect your investment philosophy. Any buying or selling should mesh with your investment philosophy. Focus on that rather than short-term performance or hunches about what the market is going to do next.
3.
Which of the following items would be part of the investment selection criteria of your investment policy statement?
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Minimum tax-efficiency ratio. The investment selection criteria are quantitative in nature.
4.
The Monitoring Procedures portion of your investment policy statement details how you will keep tabs on your investments.
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True. This is the section that covers how you will keep things in line with your executive summary.
5.
Which of the following is a question to answer while creating the investment objectives of your investment policy statement?
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How long will I be funding this goal? This is an objectives-related question.