IFIC Chapter 14 questions with verified
solutions
Compare rate of return of portfolio vs. average return of other portfolios. Measured often against
benchmark on investment policy statement (common benchmark t-bill + 4%) - correct answer ✔✔How is
the success of a portfolio manager determined?
NOTES - correct answer ✔✔The most frequently used measure of performance is to compare NAVPS at
the beginning and ending of a period.
10.26 % - correct answer ✔✔Beginning NAVPS $19.50
Ending NAVPS $21.50
Gain:
Sharpe Ratio - correct answer ✔✔A tool has been developed to take into consideration both the risk and
the return of a portfolio. _______ : this measures risk-adjusted rate of return using standard dev as
measure of risk
greater than the risk-free rate - correct answer ✔✔A good manager should earn a risk-adjusted rate of
return that is _______________
1. Benchmark Indexes- performance of a well known market index (S&P/TSX and DEX Universe for
bonds)
2. Comparison Universe- - correct answer ✔✔_________ involves comparing a mutual fund manager's
results with of an established and reliable benchmark to determine if there has been a comparatively
"good return". This is based on 2 benchmarks:
Scotia Capital Markets 91-Day T-Bill Index - correct answer ✔✔What is a Canadian Mutual benchmark
index for t-bills or the cash component of a portfolio of money market funds?
solutions
Compare rate of return of portfolio vs. average return of other portfolios. Measured often against
benchmark on investment policy statement (common benchmark t-bill + 4%) - correct answer ✔✔How is
the success of a portfolio manager determined?
NOTES - correct answer ✔✔The most frequently used measure of performance is to compare NAVPS at
the beginning and ending of a period.
10.26 % - correct answer ✔✔Beginning NAVPS $19.50
Ending NAVPS $21.50
Gain:
Sharpe Ratio - correct answer ✔✔A tool has been developed to take into consideration both the risk and
the return of a portfolio. _______ : this measures risk-adjusted rate of return using standard dev as
measure of risk
greater than the risk-free rate - correct answer ✔✔A good manager should earn a risk-adjusted rate of
return that is _______________
1. Benchmark Indexes- performance of a well known market index (S&P/TSX and DEX Universe for
bonds)
2. Comparison Universe- - correct answer ✔✔_________ involves comparing a mutual fund manager's
results with of an established and reliable benchmark to determine if there has been a comparatively
"good return". This is based on 2 benchmarks:
Scotia Capital Markets 91-Day T-Bill Index - correct answer ✔✔What is a Canadian Mutual benchmark
index for t-bills or the cash component of a portfolio of money market funds?
