CFA CFA level 3 CFA level 3 CFA level 3 CFA level 3 CFA volume 2 finquiz item set answers, study session 3, reading 5
Bạn đang xem bản rút gọn của tài liệu. Xem và tải ngay bản đầy đủ của tài liệu tại đây (25.39 KB, 4 trang )
Reading 5
The Behavioral Finance Perspective
FinQuiz.com
FinQuiz.com
CFA Level III Item-set - Solution
Study Session 3
June 2018
Copyright © 2010-2018. FinQuiz.com. All rights reserved. Copying, reproduction or
redistribution of this material is strictly prohibited.
FinQuiz.com © 2018 - All rights reserved.
Reading 5
The Behavioral Finance Perspective
FinQuiz.com
FinQuiz Level III 2018 – Item-sets Solution
Reading 5: The Behavioral Finance Perspective
1. Question ID: 67409
Correct Answer: A
Client A constructs a portfolio consistent with the traditional finance portfolio
construction process. He uses a risk tolerance level and a stated expected return to
choose an optimal portfolio (based on mean-variance analysis). He wants to maximize
his portfolio’s return given his risk objective. This approach to portfolio construction
implicitly assumes that investors (or their advisors) have perfect information and
behave rationally.
2. Question ID: 67410
Correct Answer: B
Client B uses the concepts of expected return, standard deviation, and correlation to
construct his/her portfolio. Hence, his/her portfolio construction decisions are
consistent with the traditional finance mean-variance efficient decisions.
3. Question ID: 67411
Correct Answer: C
Client C is framing his/her expenditure decisions taking into account the source of
wealth. He has classified his net worth into current income and current assets, and likes
to spend first from current income, and then from current assets. This type of mental
accounting is a partial response to the issue of self-control.
4. Question ID: 67412
Correct Answer: A
Client D is subject to the self-control bias. The client tries to deposit all extra income
and 20% of his/her annual salary to the pension account, which is considered as a
current asset for which he/she has a low marginal propensity to consume. This is in
response to the lack of self-control: by classifying assets as such, the client is trying to
save for meeting long-term goals instead of focusing on short-term satisfaction. Such an
approach is consistent with the behavioral life-cycle theory.
5. Question ID: 67413
Correct Answer: A
Client E’s subjective beliefs about the discount rates do not match those of traditional
finance (as measured by his/her portfolio manager). Hence, the client’s beliefs include a
risk sentiment; a sentiment that causes asset prices to deviate from values determined
using traditional finance approaches (efficient prices).
FinQuiz.com © 2018 - All rights reserved.
Reading 5
The Behavioral Finance Perspective
FinQuiz.com
6. Question ID: 67414
Correct Answer: B
Client F wants to maximize expected wealth on his portfolio subject to a safety
constraint. A BPT investor usually states his ability to tolerate failure to achieve at least
the aspirational level of wealth (by stating a probability level).
7. Question ID: 67420
Correct Answer: C
Bounded rationality assumes that individuals identify satisfactory sub-goals and limited
objectives and make decisions by applying heuristics that meet these sub-goals. The adaptive
market hypothesis applies an evolutionary perspective to the framework and states that as
experience increases, individuals learn and the heuristics they apply to a situation evolve.
The AMH considers both bounded rationality and evolutionary principles.
8. Question ID: 67421
Correct Answer: B
Investor A does not construct portfolios consistent with the BPT. This is because he/she
considers the covariance among the investment layers. In BPT, no consideration is given to
covariance of the investment layers since the risk and return of the portfolio as a whole is not
considered. Investors B and C make comments consistent with the BPT.
9. Question ID: 67422
Correct Answer: C
Statement 2 is incorrect. The AMH also assumes that individuals act in their own selfinterest.
Statement 3 is incorrect. The BPT does not assume that people are loss-averse and not riskaverse. It does, however, state that investors reluctant to realize losses (loss-averse) would
hold higher amounts of cash. It also states that some investors would have concave utility
functions (risk-averse investors).
10. Question ID: 67423
Correct Answer: A
The portfolio meets the safety objective (0% probability of falling below $4.5 million), but it
does not meet Hart’s aspirational goals (4% return with 70% probability). The portfolio
returns only 3.9% with a 65% probability. Hence, to meet the aspirational goals, the safety
level objective must be lowered (that is, more risk should be taken with the portfolio).
11. Question ID: 67425
Correct Answer: B
By trying to determine if stock prices move too much to be justified by subsequent changes
in dividends, Cameron is trying to identify a fundamental anomaly (an anomaly that emerges
when one considers a stock’s performance based on a fundamental assessment of the stock’s
value). By studying capital market seasonality, Cameron is trying to identify calendar
anomalies.
FinQuiz.com © 2018 - All rights reserved.
Reading 5
The Behavioral Finance Perspective
FinQuiz.com
12. Question ID: 67426
Correct Answer: A
The decision theory assumes that a decision maker is fully informed, is able to make
quantitative calculations with accuracy, and is perfectly rational. The BPT and AMH
consider bounded rationality and the concept of satisficing.
FinQuiz.com © 2018 - All rights reserved.
