Question
How is beta related to covariance with the market?
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Answer
βi=σM2Cov(Ri,RM).
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Question
What does the mnemonic TTLLU represent in an IPS?
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Answer
Time, Taxes, Liquidity, Legal, and Unique circumstances.
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Question
Which pooled vehicle is exchange-listed and uses authorized participants for creation and redemption?
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Answer
An ETF.
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Question
Why can basis risk make a hedge less effective than expected?
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Answer
The hedge may not perfectly offset the underlying exposure.
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