Consider the Theory of Active Portfolio Management

question 49

Multiple Choice

Consider the theory of active portfolio management. Shares A and B have the same beta and non-systematic risk. Share A has higher positive alpha 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:

Organisms

Individual living entities that can act or function independently, ranging from single-celled forms like bacteria to complex multicellular entities like humans.

Electron Transport System

A series of protein complexes located in the mitochondria or chloroplasts that transfer electrons, creating an electrochemical gradient to produce ATP.

ATP

Adenosine triphosphate, a molecule that carries energy within cells for metabolism.