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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?How duration and convexity can help investors better manage their fixed-income portfolios. Give examples please.
- 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?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).