You Are an Investment Manager Who Is Currently Managing Assets

question 52

Multiple Choice

You are an investment manager who is currently managing assets worth $6 billion. You believe that active management of your fund could generate an additional one-tenth of 1% return on the portfolio. If you want to make sure your active strategy adds value, how much can you spend on security analysis?

• A) $12,000,000
• B) $6,000,000
• C) $3,000,000
• D) $0

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Definitions:

Controlling Biases

Strategies or practices aimed at recognizing and mitigating the influence of personal biases in decision making and evaluations.

Self-esteem

A person's personal judgment of their own value, including their self-view and feelings like victory, sadness, self-respect, and embarrassment.

Cognitively Busy

A state of mind characterized by being engaged in high levels of mental activity, reducing capacity for processing additional information.

Cognitive Control

The ability of individuals to regulate their thoughts, emotions, and actions through mental processes, enabling goal-directed behavior.