Which One of the Following Is a Legitimate Reason Given

question 1

Multiple Choice

Which one of the following is a legitimate reason given to revise portfolios over time?

• A) The investment characteristics of stocks usually remain the same while market conditions will change.
• B) Transaction costs will be less in the long run.
• C) Many managers tend to invest the portfolios of all their clients in a similar manner which may be at odds with the investors risk-return preferences
• D) Adjustments must be made if the investor has a specific beta target for his or her portfolio.

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Definitions:

Licenses

Legal permits granted by an authority, allowing individuals or companies to carry out certain activities or businesses that would otherwise be unlawful.

Economies of Scale

The cost advantage achieved by an enterprise when production becomes efficient, as costs can be spread over a larger amount of goods.

Market Demand

The total quantity of a good or service that all consumers are willing and able to purchase at various prices during a given period.

Nondiscriminating Pure Monopolist

A monopolist who sells their product at the same price to every customer, not charging different prices to different buyers.