CFA Practice Question

There are 119 practice questions for this study session.

CFA Practice Question

Assume a portfolio manager wants to hedge against time horizon risk. She should ______ the time horizon risk factor portfolio because such a factor portfolio ______ the time horizon risk.

A. buy, is exposed to
B. sell, is exposed to
C. buy, is hedged to
Correct Answer: B

The factor portfolio is assumed to be hedged against all but time horizon risk. That is, it has zero sensitivities to all but time horizon risk.

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