Basics Beginner: 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.
Which of the following is a question to answer for the Monitoring Procedures section of your investment policy statement?
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How will I determine how well my overall portfolio is doing? This question will help you monitor your investments.
3.
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.
4.
Investment selection criteria are _______.
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Both of the above. Develop your investment selection criteria as rules for choosing investments. Then, as you monitor your portfolio, make sure that your investments continue to hold the qualities that you bought them for. If they don't, consider selling.
5.
The investment objectives portion of your investment policy statement covers what you're trying to achieve with your portfolio.
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True. It's all about goals.