Portfolio Managers a and B Each Manage $1,000,000 Funds

question 15

Multiple Choice

Portfolio managers A and B each manage $1,000,000 funds.Portfolio manager A has perfect foresight and the call option value of his perfect foresight is $180,000.Portfolio manager B is an imperfect forecaster and correctly predicts 60% of all bull markets and 70% of all bear markets.The value of portfolio manager B's imperfect forecasting ability is _________.

• A) -$45,000
• B) $45,000
• C) $54,000
• D) $108,000
• E) $126,000

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