Define Arbitrage (risk-free) portfolio

Q: Define counterparty risk

A: Counterparty risk means two parties enter into a contract to meet their specific obligations on a…

Q: How can derivative security be used to hedge portfolio risk?

A: A derivative is depicted as an investment procedure outlined to assist the financial specialist to…

Q: Discuss the concepts of "Convexity" used by bond portfolio managers in managing interest rates risk…

A: Bond portfolio managers utilize various tools and techniques to manage interest rate risk…

Q: what is portfolio load

A: Introduction : In simple words, when an individual or an entity purchase and collect different kinds…

Q: Example or scenario of market portfolio?

A: The question is based on the concept of market portfolio, which  is a bundle of  all the assets…

Q: Show that options are riskier than the underlying assets

A: Options are financial instruments that give the holder the right, but not the obligation, to buy or…

Q: What is the difference between active and passive portfolio management

A: Active Portfolio management is process of managing assets which are created with the aim of…

Q: Briefly explain on elements of Modern Portfolio Theory.

A: Modern portfolio theory brings correlation between risk and return for investors.

Q: How do derivatives hedge risk?

A:

Q: How to analysis the forex market

A: Introduction: Forex market-It is a place where banks, investment management firms, hedge funds,…

Q: Discuss the usefulness of collective investments for the fixed income segment of portfolios.

A: The portfolio's fixed income segment consists of those investment securities that pay a fixed…

Q: portfolio income includes

A: The objective of the question is to understand the components that make up portfolio income in the…

Q: Define derivatives

A: In Finance there are derivative contracts that derive its value from the underlying asset. This…

Q: oney market and capital market securities by giving appropriate examples.

A: Introduction : The money market as well as the capital market are the two most significant…

Q: What is hedge portfolio?

A: Hedge portfolio It consists of the long position in a security i.e stock and also the long position…

Q: Explain Total Return Swap?

A: Swaps are agreement between different businesses and financial institutions  which is customized as…

Q: 2. What are the two types of fixed-income portfolio management strategies and why is each used?

A: The portfolio composed of securities resulting in the regular cash flows which will ultimately helps…

Q: What are the key differences between the Arbitrage Pricing Theory (APT) and the Capital Asset…

A: Portfolio management entails the planning, supervision, timing, rationalism, and conservatism…

Q: Critically compare the riskiness of bonds and stocks from the valuation model perspective

A: The main fundamental difference between shares and bonds as investment options is the risk involved…

Q: The risk of the portfolio depends not only on the individual risks of the assets but also on the…

A: A portfolio refers to a collection or combination of financial assets held by an individual,…

Q: What is relationship between the returns on an asset and returns in the whole mark

A: A market portfolio is a theoretical concept that means a portfolio that consists of all the stocks…

Q: Explain the risk-return trade-off for liquid assets.

A: Risk return trade off tell relationship between the risk and return.

Q: Explain the Use of Derivatives to Hedge Portfolio Risk?

A: The contract whose value derives from the fluctuation of values of the underlying assets is called…

Q: Explain the reasoning behind the bond-yield-plus-judgmental-riskpremium approach.

A: Approach under which judgmental risk premium is added into a yield on an entity that is owning the…

Q: ine the difference between Passive and Active Strategies for a fixed

A: The portfolios are managed by the experienced fund managers and depending objective and mission of…

Q: Explain held-to-maturity investment.

A: Investment: It refers to the process of using the currently held excess cash to earn profitable…

Q: Discuss the following operating hedge strategies 1. Risk Shifting 2. Price Adjustment clauses 3.…

A: Hedging is a strategy which is concern with  limiting the risk by reducing the price risk of…

Q: Markowitz’s Portfolio Theory or also known as Modern Portfolio Theory (MPT) and Capital Asset…

A: Markowitz's Portfolio Theory (MPT) and the Capital Asset Pricing Model (CAPM) are two popular…

Q: Why we need tocalculate valuation of securities and yield to maturity of a security?

A: One of the important decisions that should be taken by the investor is to the valuation of security,…