The First Step a Pension Fund Should Take Before Beginning

question 51

Multiple Choice

The first step a pension fund should take before beginning to invest is to

• A) establish investment objectives.
• B) develop a list of investment managers with superior records to interview.
• C) establish asset allocation guidelines.
• D) decide between active and passive management.

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Definitions:

Net Cash Flow

The total amount of money being transferred in and out of a business, especially as it relates to operational, investing, and financing activities.

Subsidiary Acquired

A business entity whose control is obtained by another entity (parent company) through the acquisition of its majority voting stock.

Financing Cash Flows

Cash flows associated with the raising of capital and repayment of borrowings, including issuing and repurchasing shares, and payment of dividends.