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Portfolio Management
Portfolio Management
Hard
A traditional 60% equity / 40% bond portfolio has equities contributing approximately 90% of total portfolio risk. A risk parity approach would most likely result in:
A
A significantly higher allocation to bonds and lower allocation to equities to equalize risk contributions
B
An equal 50/50 capital allocation between equities and bonds
C
A higher allocation to equities because they offer higher expected returns
D
No change, because risk contribution is already proportional to expected returns
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Tags
#risk-parity
#risk-contribution
#portfolio-construction
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