Equity bias, in asset allocation investing, means (among other things) that a portfolio should: invest as much as possible in equities. subject to diversification constraints avoid equities when possible avoid corporate bonds invest in small-caps rather than large caps reflect balanced plan for equities, bonds and cash Inefficient asset classes, like Private Equity: offer higher average returns than efficient asset may exhibit serious mispricing of the underlying should generally be avoided to reduce portfolio risk call for strictly Passive investment vehicles belong to the category that Swensen calls "impure fixed income" The main upper-bound limiting the proportion of equities in portfolios based on the asset allocation approach is set by: the equity bias the degree of correlation among the stocks in the portfolio the principle of diversification the level of volatility the amount previously committed to other asset classes which of the following statements is NOT TRUE? Correlations between various asset classes have become highly unpredictable Correlations between asset classes have been increasing over the long term Correlations between asset classes increase in bear markets Correlations between risky asset classes and "safety" asset classes are generally inverse Correlations between asset classes create the most important threat to portfolio performance in the asset allocation framework Correlations between asset classes enhance portfolio diversification Corporate bonds have the following flaws, EXCEPT: credit downgrade risk callability risk default risk risk of returns skewed to the upside interest rate risk Swensen refers to what asset class as "impure fixed income"? Short-term Treasurys Long-term Treasurys Inflation-protected Treasurys Investment grade Corporates European Sovereign debt Potential causes for rising correlations between asset classes include all of the following EXCEPT: growing popularity of ETFs growing popularity of hedge funds growing popularity of private equity growing popularity of risk on/risk off strategies growing popularity of index funds