Consider the Theory of Active Portfolio Management

question 14

Multiple Choice

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

Prompts

Cues or signals that initiate, guide, or augment action or thought processes.

Post-Traumatic Stress

A mental health condition triggered by experiencing or witnessing a terrifying event, characterized by lasting flashbacks, nightmares, and severe anxiety.

Mania/Hyperactivity

A state of abnormally elevated arousal, affect, and energy level, often characteristic of bipolar disorder, leading to impulsive actions and rapid thought processes.

Social Withdrawal

Describes the act of avoiding social interactions and activities, often as a response to anxiety, depression, or preference for solitude.