President Clinton's Approach to the Controversial Policy of Affirmative Action

question 45

Multiple Choice

President Clinton's approach to the controversial policy of affirmative action was

• A) wholehearted support.
• B) a plea to "mend it, not end it."
• C) to support it for private business and universities but not for the federal government or public universities.
• D) to extend it from African Americans to other minorities.
• E) to work toward its eventual abolition.

Describe the optimal weighting of securities within an active portfolio according to the Treynor-Black model.

Differentiate between a purely passive investment strategy and one that combines passive and active elements.

Use macroeconomic and composite forecasts to determine the optimal risky portfolio in the Treynor-Black model.

Explain the properties of a risky portfolio that combines an active portfolio of mispriced securities with a market portfolio.

---

Definitions:

Interest Rate Collar

A risk management strategy used to limit exposure to interest rate fluctuations by setting upper and lower bounds.

Risk Exposure

Risk exposure is the measure of potential future losses that may result from business activities or investment decisions, due to risks that have been taken.

Variable-Rate Loan

A loan in which the interest rate can change over time, based on an underlying benchmark interest rate or index.

Interest Rate Cap

A financial derivative contract that limits the maximum interest rate a borrower has to pay on a variable-rate loan.