- CFA Exams
- CFA Level I Exam
- Study Session 19. Portfolio Management (2)
- Reading 54. Basics of Portfolio Planning and Construction
- Subject 4. Portfolio Construction
CFA Practice Question
Which is NOT one of two principals that results from the focus on SAA in portfolio construction?
B. The returns to groups of similar assets predictably reflect exposures to certain sets of systematic factors.
C. Empirical studies have shown that 85-95% of a portfolio's total returns come from the asset allocation decision.
A. A portfolio's systematic risk accounts for most of its change in value over the long term.
B. The returns to groups of similar assets predictably reflect exposures to certain sets of systematic factors.
C. Empirical studies have shown that 85-95% of a portfolio's total returns come from the asset allocation decision.
Correct Answer: C
C is the empirical evidence but not the underlying principle.
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