1|Page
CEBS RPA 2 EXAM 2025| BRAND NEW ACTUAL EXAM
WITH 100% VERIFIED QUESTIONS AND CORRECT
SOLUTIONS| GUARANTEED VALUE PACK| ACE YOUR
GRADES.
Types of investment risk - (answers)Purchasing power, business, interest rate,
market, specific
purchasing power risk - (answers)reflects the relationship between the nominal
rate of return on an investment and the increase in the rate of inflation
Business risk - (answers)the prospect of the corporation issuing the security
suffering a decline in earnings power that would adversely affect its ability to pay
interest, principal or dividends.
Interest rate risk - (answers)the well-known inverse relationship between interest
rates and (long-term) bond prices. That is to say, when interest rates increase, the
value of long-term bonds falls.
Market risk - (answers)an individual stock's reaction to a change in the market. In
general, most stock prices will increase if the stock market increases appreciably
and decrease if the market decreases appreciably.
Risk measurement beta - (answers)the price of one stock may change half as fast
as the market, on average, while another may change twice as fast. This
relationship is quantified by a measure known as beta.
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Specific risk - (answers)risk that is intrinsic to a particular firm
Tax aspect of an investment importance - (answers)Because of the tax-exempt
status of the pension fund. Investment income of qualified retirement plans is
tax-exempt, so certain types of investments may not be as attractive to pension
funds as they would be for other types of investors.
Liquidity - (answers)refers to the ability to convert an investment into cash in a
short time period with little, if any, loss in principal.
Steps for effective performance measurement - (answers)Definition. Input.
Processing. Output
Performance Measurement definition - (answers)Establishment of investment
objectives and, to the extent practical, a clearly formulated portfolio strategy
Performance Measurement Input - (answers)Availability of reliable and timely
data. Incorrect and tardy data will render the most sophisticated system
ineffective.
Performance Measurement Processing - (answers)Use of appropriate statistical
methods to produce relevant measurements. The complex interaction of
objectives, strategies and managers' tactics cannot be understood if inappropriate
statistical methods are used.
, 3|Page
Performance Measurement Output - (answers)Analysis of the process and results
presented in a useful format. Presentation should relate realized performance to
objectives and pre-established standards. Enough material should be available to
understand and analyze the process.
Caveats to performance measurement system - (answers)1. A hastily chosen
system, poorly related to real needs, can rapidly degenerate into a mechanistic,
pointless exercise.
2. System should fit the investment objectives.
3. Measuring the process may alter it.
4. To save time and cost, overmeasurement be avoided.
Internal rate of return - (answers)Allows the sponsor to determine whether the
investment is achieving the rate of return assumed for actuarial calculations.
Largely ineffective as a means of evaluating investment managers because it is
contaminated by the effects of the timing of investments and withdrawals.
Time weighted rate of return - (answers)Computed by dividing the time interval
under study into subintervals whose boundaries are the dates of cash flows into
and out of the fund and by computing the internal rate of return for each
subinterval. The geometric average for the rates for these subintervals, with each
rate having a weight proportional to the length of time in its corresponding
subinterval.
Capital Asset Pricing Model - (answers)Uses standard statistical techniques simple
linear regression to analyze the relationship between the periodic returns of the
portfolio and those of the market.
CEBS RPA 2 EXAM 2025| BRAND NEW ACTUAL EXAM
WITH 100% VERIFIED QUESTIONS AND CORRECT
SOLUTIONS| GUARANTEED VALUE PACK| ACE YOUR
GRADES.
Types of investment risk - (answers)Purchasing power, business, interest rate,
market, specific
purchasing power risk - (answers)reflects the relationship between the nominal
rate of return on an investment and the increase in the rate of inflation
Business risk - (answers)the prospect of the corporation issuing the security
suffering a decline in earnings power that would adversely affect its ability to pay
interest, principal or dividends.
Interest rate risk - (answers)the well-known inverse relationship between interest
rates and (long-term) bond prices. That is to say, when interest rates increase, the
value of long-term bonds falls.
Market risk - (answers)an individual stock's reaction to a change in the market. In
general, most stock prices will increase if the stock market increases appreciably
and decrease if the market decreases appreciably.
Risk measurement beta - (answers)the price of one stock may change half as fast
as the market, on average, while another may change twice as fast. This
relationship is quantified by a measure known as beta.
,2|Page
Specific risk - (answers)risk that is intrinsic to a particular firm
Tax aspect of an investment importance - (answers)Because of the tax-exempt
status of the pension fund. Investment income of qualified retirement plans is
tax-exempt, so certain types of investments may not be as attractive to pension
funds as they would be for other types of investors.
Liquidity - (answers)refers to the ability to convert an investment into cash in a
short time period with little, if any, loss in principal.
Steps for effective performance measurement - (answers)Definition. Input.
Processing. Output
Performance Measurement definition - (answers)Establishment of investment
objectives and, to the extent practical, a clearly formulated portfolio strategy
Performance Measurement Input - (answers)Availability of reliable and timely
data. Incorrect and tardy data will render the most sophisticated system
ineffective.
Performance Measurement Processing - (answers)Use of appropriate statistical
methods to produce relevant measurements. The complex interaction of
objectives, strategies and managers' tactics cannot be understood if inappropriate
statistical methods are used.
, 3|Page
Performance Measurement Output - (answers)Analysis of the process and results
presented in a useful format. Presentation should relate realized performance to
objectives and pre-established standards. Enough material should be available to
understand and analyze the process.
Caveats to performance measurement system - (answers)1. A hastily chosen
system, poorly related to real needs, can rapidly degenerate into a mechanistic,
pointless exercise.
2. System should fit the investment objectives.
3. Measuring the process may alter it.
4. To save time and cost, overmeasurement be avoided.
Internal rate of return - (answers)Allows the sponsor to determine whether the
investment is achieving the rate of return assumed for actuarial calculations.
Largely ineffective as a means of evaluating investment managers because it is
contaminated by the effects of the timing of investments and withdrawals.
Time weighted rate of return - (answers)Computed by dividing the time interval
under study into subintervals whose boundaries are the dates of cash flows into
and out of the fund and by computing the internal rate of return for each
subinterval. The geometric average for the rates for these subintervals, with each
rate having a weight proportional to the length of time in its corresponding
subinterval.
Capital Asset Pricing Model - (answers)Uses standard statistical techniques simple
linear regression to analyze the relationship between the periodic returns of the
portfolio and those of the market.
