CMSA (PORTFOLIO MANAGEMENT
FUNDAMENTALS) EXAM QUESTIONS AND
ANSWERS WITH COMPLETE SOLUTIONS VERIFIED,
GRADED A++
Give some characteristics of Active Investing
1. Takes on more risk for a higher return
2. Actively making investment decisions
3. Typically, higher management fees
Give some characteristics of Passive Investing
1. Making investment decisions to replicate a benchmark or index
2. Aiming to match exactly, neither outperforming, nor underperforming
Give some examples of traditional Portfolio Manager Funds
1. Mutual Funds
2. Pension Funds
3. Insurance Company
4. ETF (Exchange Traded Funds)
, *All of which can be both either passive or active
Give some examples of Non-Traditional Portfolio Manager Funds
1. Hedge Funds
2. Venture Capital
3. Distressed Funds
*All of which are passively managed
Define Top-Down approach
An investment strategy that begins with macroeconomic analysis, moves to sector evaluation, and finally
selects individual securities
Define Bottom-Up approach
An investment strategy that begins with analyzing individual companies and their fundamentals before
considering the broader industry or macroeconomic environment
How do traditional funds differ from non-traditional funds?
1. The Stakeholders
Pensions-> Employees
Mutual Funds-> Investors
Insurance Company-> Policy Owners
Endowments-> Charitable recipients
Family Office-> Founding Family
2. Risk Tolerance
FUNDAMENTALS) EXAM QUESTIONS AND
ANSWERS WITH COMPLETE SOLUTIONS VERIFIED,
GRADED A++
Give some characteristics of Active Investing
1. Takes on more risk for a higher return
2. Actively making investment decisions
3. Typically, higher management fees
Give some characteristics of Passive Investing
1. Making investment decisions to replicate a benchmark or index
2. Aiming to match exactly, neither outperforming, nor underperforming
Give some examples of traditional Portfolio Manager Funds
1. Mutual Funds
2. Pension Funds
3. Insurance Company
4. ETF (Exchange Traded Funds)
, *All of which can be both either passive or active
Give some examples of Non-Traditional Portfolio Manager Funds
1. Hedge Funds
2. Venture Capital
3. Distressed Funds
*All of which are passively managed
Define Top-Down approach
An investment strategy that begins with macroeconomic analysis, moves to sector evaluation, and finally
selects individual securities
Define Bottom-Up approach
An investment strategy that begins with analyzing individual companies and their fundamentals before
considering the broader industry or macroeconomic environment
How do traditional funds differ from non-traditional funds?
1. The Stakeholders
Pensions-> Employees
Mutual Funds-> Investors
Insurance Company-> Policy Owners
Endowments-> Charitable recipients
Family Office-> Founding Family
2. Risk Tolerance
