Question: Describe the underlying principle of a smart beta strategy
Describe the underlying principle of a smart beta strategy.
Answer to relevant QuestionsWhat is the risk associated with the use of leverage? Answer the below questions. (a) What is meant by the duration problem associated with a market-cap-weighted bond market index? (b) Why is the duration of bond index a “historical accident”? (c) What is meant by the ...Explain whether you agree or disagree with the following statement: “All duration-matching strategies are indexing strategies.” Why is it difficult to build a portfolio in pursuing a pure bond indexing strategy? Why is the tracking error more important than portfolio variance of returns when a portfolio manager’s performance is measured versus a benchmark?
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