Survivorship bias occurs when mutual funds are merged or liquidated and only
surviving funds’ performance is reported.
With the introduction of risk-free borrowing and lending changes the nature of the
original Markowitz efficient frontier by turning the efficient frontier into a straight line.
International mutual funds offer investors global diversification without exchange rate
risk.
Sharpe’s RVAR measures the slope of the line between RF and the portfolio being
evaluated. If the line is plotted between RF and a market index, where would superior
portfolios lie? Inferior portfolios?
The NYSE requires customers to deposit a minimum of how much in securities for
margin accounts
a. $2,000
b. $2,500
c. $5,000
d. $10,000
Which of the following statements concerning the trend in investment company growth
is true?
The recent trend shows more growth in closed-end investment companies.The recent
trend shows more growth in unit investment trusts.The recent trend shows more growth
in open-end investment companies.The recent trend shows more growth in exchange
traded funds.
Why is immunization considered to be a hybrid strategy?
Mature industries typically have much higher P/E ratios than growth industries, which
are riskier.
How could an investor create 100 shares of artificial stock (i.e., a portfolio with the
same payoffs as 100 shares of common stock)?
Specialists often sell short to meet public buy orders.