B) Determination of the amount of risk the portfolio can take.
A) Technological progress can have a large impact on economic growth but the growth in capital stock is less important for economic growth.
Risk budgeting - B?
C - Risk budgeting is the risk counterpart of performance attribution. It identifies the sources of the portfolio risk. B for technological blah blah Fund Sponsors often use the median account in a particular universe of account returns as an appropriate benchmark. This form of benchmark has a number of drawbacks. Which of the following is NOT a drawback that would be associated with using the median account as a benchmark? A) It is not measurable as its value cannot be determined on a reasonably frequent basis. B) It is virtually impossible to identify the median manager in advance. C) As the median manager is unknown, the measure is ambiguous.
A) It is not measurable as its value cannot be determined on a reasonably frequent basis.
A) for technology is correct a) for median manager Which of the following statements best characterizes the difference between rebalancing to consistently maintain an asset class’s target portfolio weight versus rebalancing to within an allowed range? Rebalancing to consistently maintain an asset class’s target portfolio weight: A) will result in higher trading costs. B) will always have lower tracking error. C) require more monitoring of the portfolio than rebalancing within an allowed range.
B) It is virtually impossible to identify the median manager in advance.
B) will always have lower tracking error
A was correct A for reblancing? For a global portfolio, the benchmark has to: A) have the same amount of risk as the portfolio under consideration. B) be custom defined by the manager of the portfolio. C) be consistent with the investment objective of the portfolio.
C) be consistent with the investment objective of the portfolio.
c’s correct
A for rebalancing is correct; C) be consistent… Which of the following would be regarded as the least appropriate method to measure the performance of a hedge fund? A) The Sharpe ratio. B) Separate long/short benchmarks. C) Relative performance comparisons with traditional benchmarks.
C) Relative performance comparisons with traditional benchmarks. As they are considered to be absolute return strategies.
C? Which of the following is most accurate regarding equity style index methodology? If style is viewed as a quantity then: A) stocks will be placed in either value or growth indices with no overlap. B) there will be a neutral style index category. C) the market cap of some stocks will be split between value and growth indices.
C) the market cap of some stocks will be split between value and growth indices. Overlapping
C correct. A)? In comparing returns-based style analysis with holdings-based style analysis, it is most accurate to say that: A) holdings-based style analysis is more data intensive and returns-based style analysis may be ineffective in characterizing current style. B) holdings-based style analysis is as equally data intensive as returns-based style analysis. C) returns-based style analysis is more data intensive and holdings-based style analysis may be ineffective in characterizing current style.
C) the market cap of some stocks will be split between value and growth indices A holding needs more data Why should total return analysis be used to assess the potential performance of a trade before the trade is implemented? Because total return analysis: A) allows to quantify the potential performance of any trading strategy. B) can be used to assess the likelihood of a certain outcome which will affect the potential performance of a trading strategy. C) identifies the range of possible outcomes and therefore provides the manager with a feel for the risk associated with a trade.
A) holdings-based style analysis is more data intensive and returns-based style analysis may be ineffective in characterizing current style. C) identifies the range of possible outcomes and therefore provides the manager with a feel for the risk associated with a trade.
A is correct C?
A - allows to quantify the potential performance of any trading strategy.