1. Fund managers often adopt either an active or a passive management approach to investment strategies. Briefly describe and discuss major distinction between the two approaches. (4 marks)
2. Portfolio risk reflects the overall risk for a portfolio of investments. It is the combined risk of each individual investment within a portfolio. These risks need to be managed to ensure a portfolio meets its objectives.

Explain whether combining domestic shares with some international shares can help reduce portfolio risk. Explain how this possible riskreduction is achieved.(4 marks)