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QUESTION 25 Which of the following statements regarding sensitivity analysis is correct? a. Sensitivity analysis is used in connection with behavior finance principles to assess

QUESTION 25

  1. Which of the following statements regarding sensitivity analysis is correct?

    a. Sensitivity analysis is used in connection with behavior finance principles to assess how sensitive a client is to losses in the portfolio.

    b. Sensitivity analysis is used in connection with a mean-variance optimization asset allocation strategy to determine how often the portfolio should be rebalanced.

    c. Sensitivity analysis can be used in conjunction with the SML line to determine the optimal portfolio for the client, based on the client's sensitivity to the types of assets in the portfolio.

    d. Sensitivity analysis can be used in conjunction with forecasting to provide an understanding of how the portfolio may change under various what-if scenarios.

QUESTION 26

  1. Ollie has a portfolio with a beta of zero and an alpha of 7.0. Assuming the risk-free return equals 3%, then based on the CAPM, the return for the portfolio is __________.

    a. 10%.

    b. Greater than Rm.

    c. Equal to the Rm.

    d. Less than Rm but greater than Rf .

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