LOMA 357 - MODULE 1 SHORT TEST
EXAM QUESTIONS WITH CORRECT
ANSWERS
investment policy - Answer-established by an institutional investor's board of directors, a
policy statement that outlines a set of formal rules and guidelines for investing.
compensation and benefits policy - Answer-a statement of guidelines and objectives for
a company's total package of remuneration to employees.
audit policy - Answer-a corporate statement about a company's compliance with one or
more specified set of standards.
audit - Answer-a systematic examination and evaluation of a company's records,
procedures, and controls.
conflict of interest - Answer-a situation where the interest or actions of one entity, such
as an employee, are incompatible with the interest or actions of a related entity, such as
an employer.
investment mission - Answer-for an investment portfolio, a statement that explains the
portfolio's reason for existence.
investment objective - Answer-statements that clarify a portfolio's investment mission by
specifying the financial goals for an investor to pursue in satisfying that mission.
investment strategy - Answer-used by investment portfolio managers, a planned
approach for dynamically achieving an investment mission or investment objective.
active portfolio management - Answer-a broad category of portfolio management
strategies that involves constantly researching opportunities to add value to a portfolio
by making trades and replacing existing assets with new ones.
passive portfolio management - Answer-a broad category of portfolio management
strategies that relies upon careful portfolio construction and infrequent trading. Also
known as buy-and-hold strategy.
asset allocation criteria - Answer-an element in an investment policy that consists of
rules stating limits on the portion of a portfolio that may be invested in a stated category.
Also known as diversification criteria or limitations on asset concentrations.
EXAM QUESTIONS WITH CORRECT
ANSWERS
investment policy - Answer-established by an institutional investor's board of directors, a
policy statement that outlines a set of formal rules and guidelines for investing.
compensation and benefits policy - Answer-a statement of guidelines and objectives for
a company's total package of remuneration to employees.
audit policy - Answer-a corporate statement about a company's compliance with one or
more specified set of standards.
audit - Answer-a systematic examination and evaluation of a company's records,
procedures, and controls.
conflict of interest - Answer-a situation where the interest or actions of one entity, such
as an employee, are incompatible with the interest or actions of a related entity, such as
an employer.
investment mission - Answer-for an investment portfolio, a statement that explains the
portfolio's reason for existence.
investment objective - Answer-statements that clarify a portfolio's investment mission by
specifying the financial goals for an investor to pursue in satisfying that mission.
investment strategy - Answer-used by investment portfolio managers, a planned
approach for dynamically achieving an investment mission or investment objective.
active portfolio management - Answer-a broad category of portfolio management
strategies that involves constantly researching opportunities to add value to a portfolio
by making trades and replacing existing assets with new ones.
passive portfolio management - Answer-a broad category of portfolio management
strategies that relies upon careful portfolio construction and infrequent trading. Also
known as buy-and-hold strategy.
asset allocation criteria - Answer-an element in an investment policy that consists of
rules stating limits on the portion of a portfolio that may be invested in a stated category.
Also known as diversification criteria or limitations on asset concentrations.
