1. Tactical asset allocation differs from strategic asset allocation:
    1. In that it provides the overall framework for implementation pursuant to the IPS.
    2. In that it involves shifts in the overall allocation, but only within the context of the strategic allocation in an effort to exploit short term market inefficiencies.
    3. May impact return.
    4. Both b. and c.
  2. Risks of rebalancing include all of the following:
    1. Additional transaction costs.
    2. Added tax liability.
    3. The consistent application of the client's strategic asset allocation.
    4. All of the foregoing.
  3. Hedging and monetization strategies include all of the following, EXCEPT:
    1. Use of variable prepaid forwards.
    2. Gradual sale of shares over time.
    3. Use of a separate account for increase diversification.
    4. Exchange traded fund.
  4. Strategic asset allocation may be implemented through any of the following means, except:
    1. Index funds.
    2. Separate account managers.
    3. Tax deferred retirement accounts.
    4. Core plus approach.
  5. The risks of not addressing low basis stock include:
    1. Severe tax liability.
    2. Heightened volatility due to lack of diversification.
    3. Effective risk-management.
    4. Both a. and b.
Review Questions 17 - 22

Related Articles
  1. Investing

    Strategic Asset Allocation to Rebalance Portfolios

    This involves setting allocations for various asset classes, then yearly rebalancing the portfolio when it deviates from the initial settings.
  2. Investing

    What Is Strategic Asset Allocation?

    A strategic asset allocation takes a long-term approach to help an investor achieve their financial goals. Here's how it works.
  3. Managing Wealth

    6 Asset Allocation Strategies That Work

    Your portfolio's asset mix is a key factor in whether it's profitable. Find out how to get this delicate balance right.
  4. Financial Advisor

    An Introduction to Asset Allocation

    A portfolio is only as strong as its asset allocation. To create the right one, investors need to determine their risk tolerance, time horizon and goals.
  5. Financial Advisor

    Asset Allocation vs. Security Selection: The Main Differences

    Both are important to a long-term investment strategy, but asset allocation and security selection have different missions.
  6. Investing

    Why Asset Allocation Matters in Your Portfolio

    Asset allocation accounts for more than 90% of the investment process.
  7. Managing Wealth

    Choose Your Own Asset Allocation Adventure

    There are many strategies to help balance your portfolio. Here are a few to get you started.
  8. Investing

    6 Asset Allocation Strategies That Work

    An asset mix should reflect an investor’s current goals. Here are a few strategies for establishing the right allocation.
  9. Financial Advisor

    The 401(k) Emergency Boomers Need to Address Now

    The asset allocations of Baby Boomers’ 401(k)s are dangerously out of balance. Here's how to remedy that.
  10. Investing

    5 Tips to Increase the Performance Of Your Portfolio

    Discover helpful steps an investor can easily take to improve the performance of his investment portfolio by maximizing gains and minimizing losses.
Frequently Asked Questions
  1. When are Beneficiaries of a Will Notified?

    Learn when the beneficiaries of a will must be notified, and understand how this requirement varies depending on whether ...
  2. Why Does Larry Page Pay Himself a $1 Salary?

    Google co-founder Larry Page continues to take an annual salary of only $1 as chief executive officer.
  3. What is Common Stock and Preferred Stock?

    Learn about the differences between common and preferred shares. Explore situations where preferred shares have more favorable ...
  4. Can CareCredit be Used for Family Members?

    Learn more about the available options that CareCredit offers to pay for out-of-pocket medical procedures with little to ...
Trading Center