Why should total return analysis be used to assess the potential performance of a trade before the trade is implemented? Because total return analysis:
A) | allows to quantify the potential performance of any trading strategy. |
| | B) | consists of evaluating the worst-case scenario which enables an investor to know his highest potential loss. |
| | C) | can be used to assess the likelihood of a certain outcome which will affect the potential performance of a trading strategy. |
| | D) | identifies the range of possible outcomes and therefore provides the manager with a feel for the risk associated with a trade. |
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Answer and Explanation
Total return analysis can be used with scenario analysis to assess the potential performance and risk associated with the wide variety of bond investment strategies. Total return analysis may be used to determine the potential performance, and scenario analysis may be used to ascertain how the performance will vary under different sets of assumptions.
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发表于 2008-9-15 11:47
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