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NEW QUESTION: 1
Security A and B both have expected returns of 10%, but the standard deviation of Security A is 10% while that of security B is 20%. Borrowings are not permitted. A portfolio manager who wishes to maximize his probability of earning a 25% return during the year should invest in:
A. Security B
B. None of the above
C. 50% in Security A and 50% in Security B
D. Security A
Answer: A
Explanation:
Explanation
Security A 'dominates' security B, ie it offers the most return per unit of volatility. However, because it is less volatile, its returns are likely to be more concentrated around its mean compared to Security B which will have
'fatter tails' compared to Security A. Therefore Security B will offer a much better chance of making the desired 25% return. Of course, this also means that Security B is much more likely to lose a lot more money than Security A. However, if the portfolio manager is only interested in maximizing his chances of making a
25% or greater return, he should select Security B. The answer can be verified using Excel's Normdist formula, and probability of exceeding 25% will be given by [=1-NORMDIST(0.25,0.1,0.1,TRUE)] for Security A and =1-NORMDIST(0.25,0.1,0.2,TRUE)] for Security B. A combined portfolio of the two will have a return of 10% and variance less than that of Security B (or at the most equal to the weighted average of the two variances, even if their correlation is 1), which means a combined portfolio will also have a lower probability of exceeding a 25% return.
This question reflects how portfolio managers may be tempted to make sub-optimum decisions for their investors by swinging for the fences by taking large bets, for example, when they have had a big drawdown and have to make it up to the high water mark levels before they earn performance fees.
NEW QUESTION: 2
インターネットギャンブルが理想的なWebベースのマネーロンダリング方法である主な理由は次のうちどれですか？
A. 主要なインターネットサービスプロバイダーとの接続のしやすさと低購読率。
B. 既知の高犯罪地域にある多数のオフショアWebサイト。
C. 管轄区域間で価値を移転する能力。
D. ギャンブルサイトの高い信頼性。
Answer: C
NEW QUESTION: 3
An administrator creates an account for a new user, and wants this user to have limited capabilities accessing SSH. The administrator defined the account, but the user still has full control.
Which two settings would the administrator use to correct this problem? (Choose two.)
A. the user account settings in OnCommand system Manager
B. the user account settings in Windows Active Directory Users and Computers
C. the user account settings of the admin account
D. the user account settings in the clustershell
Answer: A,D
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