The Opportunity Cost of Portfolio Insurance Is the Difference in the Value

question 4

True/False

The opportunity cost of portfolio insurance is the difference in the value of the insured portfolio and the value of the uninsured portfolio when the market goes up.

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Definitions:

Operating Income

The profit realized from a business's operations after subtracting operating expenses from the gross profit.

Contribution Format

An income statement format that separates fixed and variable costs to highlight the contribution margin.

Variable Expense Ratio

A metric that compares variable expenses (costs that change with production levels) to total sales, indicating how much revenue is consumed by variable costs.

Contribution Margin

The amount remaining from sales revenue after variable expenses have been deducted, indicating the contribution towards covering fixed costs and generating profit.