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CFA Level 1 Exam

3959 Questions

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Question No. 1

Ken Willis is the portfolio manager of an aggressive growth fund. Ken is concerned about the future
performance of his high-beta portfolio in light of his belief that the stock market is currently overvalued. Willis' firm requires that he maintain at least 80% of the portfolio's value in equities at all times. Willis decided his best course of action is to buy put options to protect the portfolio from the potential loss resulting from a market decline. The profits and losses from an equity portfolio combined with long puts would have risk characteristics similar to a:

Choose the correct option from the given list.
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