Portfolio Managers Paul Martin and Kevin Krueger Each Manage $1,000,000

question 15

Multiple Choice

Portfolio managers Paul Martin and Kevin Krueger each manage $1,000,000 funds.Paul Martin has perfect foresight and the call option value of his perfect foresight is $150,000.Kevin Krueger is an imperfect forecaster and correctly predicts 50% of all bull markets and 70% of all bear markets.The value of Kevin Krueger's imperfect forecasting ability is __________.

• A) $30,000
• B) $67,500
• C) $108,750
• D) $217,500

---

Definitions:

Transition

The process or period of changing from one state or condition to another.

Rigid Stance

A firm or inflexible position or opinion on a particular subject, showing little to no willingness to change.

Opening Statement

The initial remarks of an argument, presentation, or legal trial, aimed at providing an overview or setting the context.

Presentation

A structured delivery of information to an audience, often involving visual aids or speeches to convey messages.