Question

What is the primary focus of the Traditional Approach in portfolio management?

a.

Predicting future stock prices

b.

Maximizing investor's wealth subject to risk

c.

Random behavior of stock market prices

d.

Identifying over or under valued securities

Answer: (b).Maximizing investor's wealth subject to risk Explanation:The Traditional Approach in portfolio management is mainly concerned with maximizing the investor's wealth subject to risk, considering the investor's profile, portfolio objectives, investment strategy, diversification, and individual investment selection.

Interact with the Community - Share Your Thoughts

Uncertain About the Answer? Seek Clarification Here.

Understand the Explanation? Include it Here.

Q. What is the primary focus of the Traditional Approach in portfolio management?

Similar Questions

Explore Relevant Multiple Choice Questions (MCQs)

Q. What does the Random Walk Theory propose about stock market prices?

Q. According to the Efficient Market Theory, what does an efficient market imply?

Q. What are the three levels of market efficiency in the Efficient Market Theory?

Q. Who proposed the Markowitz Model of risk-return optimization in portfolio theory?

Q. How is the Portfolio Expected Return (E(RP)) calculated in terms of individual securities?

Q. How is Portfolio Risk measured in terms of the variance or standard deviation of its return?

Q. What does the Capital Asset Pricing Model (CAPM) predict the relationship between?

Q. What is the CAPM method primarily concerned with in terms of risk?

Q. How are non-diversifiable risks assessed in the CAPM method?

Q. What does the formula R = Rf + B (Rm - Rf) represent in the CAPM model?

Q. What is one of the relevant assumptions of the Capital Asset Pricing Model (CAPM)?

Q. What does the Security Market Line (SML) in CAPM represent?

Q. According to the Arbitrage Pricing Theory Model, what are the four factors that explain the risk premium relationship of a particular security?

Q. What does the upward-sloping line in the Security Market Line (SML) indicate?

Q. What is the main advantage of the Arbitrage Pricing Theory Model?

Q. When considering debt investments in portfolio management, what important factor should investors pay attention to?

Q. What does default risk refer to in the context of debt instruments?

Q. How does interest-rate risk affect bond prices and debt funds in portfolio management?

Q. What is advisable when investing in longer-duration bonds in the context of interest-rate expectations?

Q. How did bond yields and NAVs of debt funds react when the RBI did not hike interest rates as expected?

Recommended Subjects

Are you eager to expand your knowledge beyond IC 89 Management Accounting? We've handpicked a range of related categories that you might find intriguing.

Click on the categories below to discover a wealth of MCQs and enrich your understanding of various subjects. Happy exploring!