In Order to Effectively Hedge a Stock Portfolio, the Portfolio

question 48

Multiple Choice

In order to effectively hedge a stock portfolio, the portfolio manager must know the total dollar value of the portfolio, the current index futures price, and:

• A)the number of contracts available in the market.
• B)the portfolio P/E ratio.
• C)the relative volatility of the portfolio to the market.
• D)More than one of the above

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Definitions:

Whistle-Blowers

Employees or individuals who expose unethical, illegal, or harmful practices within an organization to the public or to those in positions of authority.

Decision Errors

Mistakes made in the process of making choices, often due to incorrect information, poor analysis, or bias.

Groupthink

The capacity for group pressure to damage the mental efficiency, reality testing, and moral judgment of decision-making groups.

Dissension

Disagreement or conflict of opinion among a group of people.