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A Managed Portfolio Has a Standard Deviation Equal to 22

question 4

Multiple Choice

A managed portfolio has a standard deviation equal to 22% and a beta of 0.9 when the market portfolio's standard deviation is 26%. The adjusted portfolio P________ needed to calculate the M2 measure will have ________ invested in the managed portfolio and the rest in T-bonds.


Definitions:

Cash Flow Hedge

A financial strategy used to manage the risk of fluctuations in cash flows caused by changes in foreign exchange rates, interest rates, or commodity prices.

Spot Exchange Rates

Refers to the current exchange rate at which a currency can be bought or sold for immediate delivery.

Foreign Currency

Currency used in a country other than one's own, necessitating exchange for local use.

Depreciates

Depreciates refers to the reduction in the value of an asset over time due to wear and tear, age, or obsolescence, typically reflected in accounting as a method to allocate the cost of an asset over its useful life.

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