Consider the Theory of Active Portfolio Management

question 1

Multiple Choice

Consider the theory of active portfolio management. Shares A and B have the same positive alpha and the same non-systematic risk. Share A has a higher beta than share B. You should want ________ in your active portfolio.

• A)equal proportions of Shares A and B
• B)more of Share A than Share B
• C)more of Share B than Share A
• D)more information is needed to answer this question

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Definitions:

Compulsive Fretting

An uncontrollable and persistent worry about minor or major concerns often leading to stress and anxiety.

Overthinking

The process of thinking about something too much or for too long, often leading to unnecessary worry or anxiety.

Social-cognitive

Relating to a theory in psychology that emphasizes the importance of observational learning, self-efficacy, situational influences, and cognitive processes in understanding behavior.

Learned Helplessness

A state where an individual experiences feelings of being powerless, due to a traumatic experience or ongoing inability to achieve success.