QUESTION: 97

Compared with younger people, older people are more likely to have:

lower accumulated savings and spend less on consumer goods
higher accumulated savings and spend less on consumer goods.
higher accumulated savings and spend more on consumer goods

Answer(s): B

Explanation:

Older people typically have higher accumulated savings compared to younger people due to their longer work history and accumulation of assets over time. However, they tend to spend less on consumer goods as their consumption patterns change with age, often focusing more on healthcare and essential services rather than discretionary spending on consumer goods.

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QUESTION: 98

Which of the following is an advantage of using ESG index-based strategies?

Slightly lower fee structures compared to other index-based strategies
Lower costs compared to discretionary, actively managed ESG strategies
More focused stewardship activities with companies compared to actively managed ESG strategies

Answer(s): B

Explanation:

One of the main advantages of using ESG index-based strategies is the lower cost compared to discretionary, actively managed ESG strategies. Index-based strategies typically have lower fee structures because they are passively managed, following specific ESG criteria without the need for active selection and management of individual securities. This cost efficiency makes ESG index-based strategies appealing to investors looking for ESG integration with lower management fees.

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QUESTION: 99

When assessing credit and ESG ratings, which of the following statements is most accurate?

The correlation between country ESG risk and credit ratings is high
The correlation between ESG ratings among rating providers is high
The correlation between credit ratings among credit rating agencies (CRAs) is low

Answer(s): A

Explanation:

There is a high correlation between country ESG risk and credit ratings. Countries with higher ESG risks typically face higher borrowing costs and lower credit ratings due to the perceived increased risk associated with environmental, social, and governance factors. This correlation reflects the importance of ESG factors in assessing the overall creditworthiness and financial stability of countries.

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QUESTION: 100

In ESG integration, model adjustments are typically performed at the:

research stage
valuation stage.
portfolio construction stage

Answer(s): B

Explanation:

In ESG integration, model adjustments are typically performed at the valuation stage. This involves adjusting financial models to reflect ESG risks and opportunities, which can impact revenue forecasts, operating costs, discount rates, and terminal values. By integrating ESG factors into the valuation process, investors can better assess the long-term sustainability and financial performance of their investments.

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QUESTION: 97

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QUESTION: 99

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