In the Evaluation of Bond Portfolio Performance, the Policy Effect

question 9

Multiple Choice

In the evaluation of bond portfolio performance, the policy effect refers to

• A) the difference in portfolio duration and index duration.
• B) the extra return attributable to acquiring bonds that are temporarily mispriced relative to risk.
• C) short-run changes in the portfolio during a specific period.
• D) the differential return from changing duration of the portfolio during a specific period.
• E) none of the above.

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Definitions:

Emotionally Restrained

A characteristic of individuals who regulate and often suppress their emotional responses to situations.

Post-Traumatic Stress Disorder

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

Dissociative Disorders

Mental health conditions that involve experiencing a disconnection and lack of continuity between thoughts, memories, surroundings, actions, and identity.

Extreme Stress

A heightened state of mental or emotional strain resulting from very adverse or demanding circumstances, which can impact one’s health and well-being.