Chartered Investment Manager (CIM) Practice Exam · Question
How can derivatives primarily be used in portfolio management?
Derivatives are versatile instruments used in portfolio management to both manage downside risk (hedging) and potentially enhance returns through strategic spec
Start free practice for Chartered Investment Manager (CIM) Practice Exam
399 questions · no signup required · 40 free questions per day
Question: How can derivatives primarily be used in portfolio management?
Answer options:
- To directly increase the dividend income of a portfolio. ✅ To manage risk and enhance returns through hedging or speculation.
- To replace traditional equity and fixed-income investments entirely.
- To guarantee a positive return regardless of market conditions.
Correct answer: To manage risk and enhance returns through hedging or speculation.
Explanation: Derivatives are versatile instruments used in portfolio management to both manage downside risk (hedging) and potentially enhance returns through strategic speculation.
Start free practice for Chartered Investment Manager (CIM) Practice Exam
399 questions · no signup required · 40 free questions per day
More about Chartered Investment Manager (CIM) Practice Exam
Related Questions
- Strategic asset allocation is:
- Modern Portfolio Theory introduced by:
- A client approaches you, a CIM-credentialed portfolio manager, wanting to understand the true cost of their mu
- Duration measures bond sensitivity to:
- Which of the following is an example of an alternative investment?
- An investment advisor's foremost duty to a client is to act in their best interest, placing the client's inter
More for Chartered Investment Manager (CIM) Practice Exam candidates
Ready to practice?
Free, no signup required. Build a wrong-question list as you go.
Start Free Chartered Investment Manager (CIM) Practice Exam Practice →Related courses
Other Canadian certifications candidates often prepare for alongside this one.