Sell disciplines of active investors

CFA Level III
#1
  1. Which of the following selling disciplines would be best for an investor who is concerned about the tax implications of a trade? A) Up-from-cost. B) Deteriorating Fundamentals. C) Opportunity cost. 2) In which of the following selling disciplines would the investor sell the stock after it had reached its intrinsic value? A) Up-from-cost. B) Target price. C) Valuation-level.
#2
  1. A? 2 - B. Not sure if I have read anything about Valuation Level
#3

what reading is this in? portfolio rebalancing?

#4

I’m going C on both, but don’t remember any of this.

#5

C on both.

#6

C, b

#7

Its definitely C on the first Opportunity cost considers variables such as transaction costs when selling. Pretty sure it takes into account taxes. 2 is rough… probably C Im not really sure valuation-level is a real selling strategy. But i know target price is just a target you set. It isn’t necessarily based on fundamentals… you could just say my price target for GM is $5 and when it hits there you sell… Doesnt mean it is its intrinsic value. I’d go C

#8

from which reading these questions are???

#9

B: tax implications, deteriorating fundamentals - he can use tax loss harvesting. so that he can offset this loss against some other gains. ??? C: Valuation level :

#10

Sort of guesses, but I’m gonna say B on both. I remember reading about selling diciplines a couple weeks ago, but I don’t remember the details.

#11

B and C. It is from SS 11.

#12
  1. Your answer: C was correct! If an investor factors in the transactions costs and tax consequences of the sale of the existing security and the purchase of the new security, this approach is referred to as an opportunity cost sell discipline. FRM2CFA…valid justification but he could still sell stock at profit and tax would be a concern. Whereas in opportunity cost investor would do cost benefit analyis (Tax , transactions costs) before replacing existing stock. 2) Your answer: B was correct! In a target price sell discipline, the manager determines the stock’s fundamental value at the time of purchase and later sells the stock when it reaches this level. Explaination for valulation level sell discipline as per Schweser - Value investor may sell a stock if its P/E rises to the ratio’s historical mean. Though my ans was correct but I am not sure why C is not the righ ans too.
#13

Rakesh Wrote: ------------------------------------------------------- > 1) Your answer: C was correct! > > If an investor factors in the transactions costs > and tax consequences of the sale of the existing > security and the purchase of the new security, > this approach is referred to as an opportunity > cost sell discipline. > > FRM2CFA…valid justification but he could still > sell stock at profit and tax would be a concern. > Whereas in opportunity cost investor would do cost > benefit analyis (Tax , transactions costs) before > replacing existing stock. > > 2) Your answer: B was correct! > > In a target price sell discipline, the manager > determines the stock’s fundamental value at the > time of purchase and later sells the stock when it > reaches this level. > > Explaination for valulation level sell discipline > as per Schweser - Value investor may sell a stock > if its P/E rises to the ratio’s historical mean. > Though my ans was correct but I am not sure why C > is not the righ ans too. good stuff. Make sense to me now.

#14

easy but important LOS.