In the Maximax Strategy a Manager Choosing Between Two Options

question 11

Multiple Choice

In the maximax strategy a manager choosing between two options will choose the option that

• A)has the highest expected profit.
• B)provides the best of the worst possible outcomes.
• C)provides the best of the highest possible outcomes.
• D)has the lowest variance.
• E)a and d

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Definitions:

Treynor-Black Model

A portfolio optimization model that adjusts for risk and incorporates passive and active components.

Active Portfolio

An Active Portfolio is a collection of investments actively managed by fund managers or investors, regularly making buy, sell, and hold decisions in an attempt to outperform the benchmark index.

Abnormal Returns

Returns on a stock or portfolio that differ significantly from the expected return based on the market or certain benchmarks.