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Robert Chen, CFA, is reviewing the characteristics of derivative securities and their use in portfolios. Chen is considering the addition of either a short position

Robert Chen, CFA, is reviewing the characteristics of derivative securities and their use in portfolios. Chen is considering the addition of either a short position in stock index futures or a long position in stock index options to an existing well-diversified portfolio of equity securities. Contrast the way in which each of these two alternatives would affect the risk and return of the resulting combined portfolios. Source: CFA Level 2 exam

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