Raptor Capital is a hedge fund holding $5 billion in assets under management (AUM) and charging the classic 2 x 20 fee structure from investors: 2% of assets under management and 20% of profits. In 2020, Raptor delivered gross returns of 10%. In addition, Raptor spends $50 million to run the fund (office, IT, research, back office, legal, and prime brokerage fees). On the basis of this information we can conclude that in 2020, Raptors partners will make a profit of:

a. $200 million

b. $150 million

c. $100 million

d. $50 million

Please mark the only incorrect statement about portfolio management:

a. if a portfolio manager increases the weight wB of corporate investment-grade bonds and reduces the weight wE of US equities in a balanced portfolio, she will likely increase the expected return and reduce the volatility of the portfolio P

b. a portfolio manager can also build a well-diversified portfolio P mixing other mutual funds and ETFs

c. portfolio managers should closely monitor the resulting beta of an all equities portfolio and duration of an all bonds portfolio

d. a portfolio manager can build a well-diversified portfolio P mixing hundreds of stocks and bonds