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Examine the difference between Passive and Active Strategies for a fixed Income Portfolio
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- Capital asset pricing theory asserts that portfolio returns are best explained by:a. Economic factors.b. Specific risk.c. Systematic risk.d. Diversification.How do an investment's required rate of return vary with perceived risk? Explain with an example?can you draw a profit diagram of the portfolio above and state any assumptions that must be made. Also, is the cost of the portfolio positive?
- How duration and convexity can help investors better manage their fixed-income portfolios. Give examples please.The Capital Asset Pricing Model (CAPM) asserts that an asset’s expected return is equal to the risk-free rate plus a risk premium for: a. Volatility b. Systematic risk c. Non-systematic risk d. Diversification e. Marginal utility of consumptionExplain the relationship between JENSEN's alpha and the security marketline of the Capital asset pricing model (CAPM).