A Passive Asset Allocation Strategy Involves ________

question 16

Multiple Choice

A passive asset allocation strategy involves ________.

• A)investing in the shares of companies which are price takers
• B)maintaining approximately the same proportions of a portfolio in each asset-class over time
• C)varying the proportions of a portfolio in each asset-class in response to changing market conditions
• D)selecting individual securities in different sectors that are believed to be undervalued

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Definitions:

Base Case Values

Refers to the initial set of assumptions, inputs, and data used in financial models to project future outcomes under a standard scenario.

Scenario Analysis

Scenario Analysis is an analytical method used to examine different possible future events or scenarios and their potential impacts on decision outcomes.

Positive Net Present Value

An indicator that an investment is expected to generate more cash than its initial cost, leading to a profitable outcome.

Marginal Tax Rate

The marginal tax rate is the rate at which an additional dollar of income would be taxed, highlighting how much of the next dollar earned will go to taxes.