You Are Given the Following Information About a Portfolio You

question 11

Multiple Choice

You are given the following information about a portfolio you are to manage.For the long-term you are bullish, but you think the market may fall over the next month. If the anticipated market value materializes, what will be your expected loss on the portfolio

• A)7.58%
• B)6.52%
• C)15.43%
• D)8.57%
• E)6.42%

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Definitions:

Portfolio

A group of investment vehicles comprising stocks, bonds, commodities, as well as cash and its equivalents, together with mutual funds and ETFs.

Adverse Selection

Adverse selection refers to a situation where sellers have information that buyers do not, or vice versa, about some aspect of product quality.

Utility Function

A mathematical representation of how consumers rank different bundles of goods according to their level of satisfaction or utility.

Wealth

The presence of significant financial assets or tangible property that can be transformed into a medium suitable for trade.