CTP - Module 6|Questions with complete solutions | 100% verified|10 pages

CTP - Module 6 Asset allocation ANSWER- The mix between bonds and equities in a capital market investment portfolio. A careful analysis of the investor's risk tolerance is a starting point for determining the optimal asset allocation. Asset/liability management ANSWER- The process of managing and coordinating the assets and liabilities held in an investment portfolio to maximize earnings and minimize risk. Whenever an investment portfolio utilizes borrowed funds as part of its overall strategy, the issue of asset/liability management arises. This is primarily an issue for banks and large financial institutions that fund their investments with either deposits or borrowed funds. In many cases, the issue is expressed in terms of a maturity mismatch; that is, the institution may be borrowing funds in the short-term markets (e.g., by using commercial paper) while using the proceeds from the financing to purchase long-term assets. At the market (ATM) program ANSWER- A type of stock sales program that allows listed companies to sell additional shares of company stock over time through a designated broker-dealer at the current or prevailing market price to raise additional capital.