When the Portfolio Manager Identifies the Highest Certainty Equivalent Return

question 24

Multiple Choice

When the portfolio manager identifies the highest certainty equivalent return with the feasible risky portfolio, it is the same as identifying the feasible portfolio that places the investor on the highest possible ___________.

• A) risky asset
• B) risk free portfolio
• C) indifference curve
• D) benchmark portfolio

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Definitions:

Operating Activity

Activities that relate directly to the primary business operations of a company, such as sales and service revenues and associated costs.

Financing Activities

Activities that result in changes in the size and composition of the equity capital and borrowings of the entity.

IFRS

International Financial Reporting Standards are a set of accounting standards developed by the International Accounting Standards Board (IASB) to guide companies and organizations in preparing financial statements globally.

Direct Method

A cash flow statement presentation that lists major classes of gross cash receipts and payments, giving a clear view of actual cash flows.