There are several popular portfolio management styles employed by professional money managers. In which asset allocation program is it most likely that commission expense will have a significant impact on portfolio performance? The tactical style is an active one; the other choices are all passive.
Portfolio A would be preferred by investors because it has the same return (10%) as Portfolio B but bears less risk. One of the assumptions of MPT is that investors prefer less risk rather than more risk per unit of return. Because Portfolio A has a smaller standard deviation than that of Portfolio B, it has less risk.
The following is an example of a fundamental active equity portfolio management strategy. a. Contrarian investing. b. Earnings momentum investing. c. Low P/E and low P/BV investing. d. Bottom up investing. e. Investing on the basis of calendar effects. D A fundamental tenet of the contrarian investment strategy is the notion that a.
Two portfolios have the same expected return of 10%. Portfolio A has a standard deviation of 5% and Portfolio B has a standard deviation of 18%. Under Modern Portfolio Theory (MPT):