A Portfolio Consists of Three Index Funds: an Equity Index

question 2

Multiple Choice

A portfolio consists of three index funds: an equity index, a bond index, and an international index. The portfolio manager changes the weights periodically according to forecasts for each sector. This is an example of ________.

• A) a passively managed core with an actively managed component
• B) a totally passively managed fund
• C) passive asset allocation with active security selection
• D) active asset allocation with passive security selection

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Definitions:

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in its price, indicating the sensitivity of demand to price changes.

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded.

Consumer Purchases

Transactions in which individuals buy goods and services for personal use, reflecting consumer spending habits and economic health.

Elasticity

A measure in economics that shows how the quantity demanded or supplied of a good changes in response to a change in price.