Mutual Fund Portfolio Manager Qualifications

Play an AI-generated podcast conversation about this lesson

Which designation must portfolio managers obtain in order to be registered with the provincial securities commissions?

Certified Management Accountant (CMA)

Certified Public Accountant (CPA)

Chartered Financial Analyst® (CFA)® (correct)

Financial Risk Manager (FRM)

What educational requirement must portfolio managers satisfy in order to be granted registration?

Bachelor's degree in any field

Completion of an approved designation like CFA (correct)

Completion of a trade school program

High school diploma

What work experience requirement must individuals meet to obtain the CFA Charter?

Having a high school diploma

Completing a trade school program

Passing an intensive course of study

Fulfilling a work experience requirement (correct)

Which section in the simplified prospectus typically describes the investment strategy of a mutual fund?

Investment Strategies Signup and view all the answers

What is the minimum length of time that portfolio managers must show they have performed portfolio management duties?

$1$ year Signup and view all the answers

Which regulatory document specifies the educational and experience requirements for portfolio managers?

National Instrument 31-103 Signup and view all the answers

Why is it important for investors to know whether a portfolio manager uses an active or passive strategy?

To manage client expectations Signup and view all the answers

What type of risk is described as occurring when investors or businesses have assets in foreign countries and require foreign currency?

Currency risk Signup and view all the answers

How does an appreciation of the Canadian dollar relative to the U.S. dollar impact the return of investments held in the U.S.?

Decreases returns Signup and view all the answers

Which measure is used to assess the changes in a security's value over a period of time?

Volatility Signup and view all the answers

Why do highly volatile securities pose a higher risk to mutual funds?

They experience large price fluctuations Signup and view all the answers

What is the characteristic of investments with lower volatility levels?

Steady price changes over time Signup and view all the answers

Why is it important to understand the types of risks securities are exposed to?

To assess volatility levels and expected returns Signup and view all the answers

What impact does currency risk have on the total return of a fund?

Reduces total return Signup and view all the answers

How do investments with higher volatility levels compare to those with lower volatility levels in terms of risk?

Highly volatile investments are more risky Signup and view all the answers

Why should investors not evaluate investments solely based on their own characteristics?

To reduce risk within their portfolios Signup and view all the answers

How does diversifying a portfolio help investors?

Reduce overall risk and enhance potential return Signup and view all the answers

What key benefit does Modern Portfolio Theory offer in constructing portfolios?

Provides a mathematical framework for diversification Signup and view all the answers

Why is it advisable to combine bonds with equities in a portfolio?

To reduce the overall volatility of the portfolio Signup and view all the answers

What does the efficient frontier represent in Modern Portfolio Theory?

Portfolios that provide the highest return for a given amount of risk Signup and view all the answers

Why are there multiple optimal portfolios according to Modern Portfolio Theory?

Because investors have different risk levels Signup and view all the answers

How does Modern Portfolio Theory define the optimal portfolio?

The one that provides the highest return for a particular risk level Signup and view all the answers

What is the primary benefit of plotting portfolios on the efficient frontier?

Providing visual representation of optimal portfolios Signup and view all the answers

Why are portfolios below the frontier considered inefficient and inferior?

They offer lower return for the same level of risk. Signup and view all the answers

What key purpose does financial analysis serve for portfolio managers?

To analyze past and current company performance. Signup and view all the answers

Which type of financial statement is NOT commonly used by portfolio managers for analyzing securities?

Statement of Cash Flows Signup and view all the answers

What do portfolio managers use debt-equity ratios for?

To analyze a company's financial leverage. Signup and view all the answers

Why are audited financial statements published annually by companies that offer securities to the public?

To meet legal requirements. Signup and view all the answers

Which type of ratio is commonly used by portfolio managers to assess how efficiently a company uses its assets to generate profit?

Profitability ratio Signup and view all the answers

What is the main purpose of the Statement of Retained Earnings for portfolio managers?

To evaluate the change in retained earnings over time. Signup and view all the answers

What information can be derived from a company's Cash Flow Statement by portfolio managers?

Liquidity position of the company Signup and view all the answers

Which mutual fund is considered higher risk due to a higher standard deviation?

Lowell Signup and view all the answers

What does Beta measure in an investment?

Systematic risk relative to a benchmark index Signup and view all the answers