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The equity mutual fund's risk audit committee is reviewing a portfolio construction approach proposed by a recently appointed portfolio manager, who has been allocated capital to manage. Although the fund typically grants its managers the flexibility to select and implement appropriate portfolio construction methods, it requires that the chosen strategy satisfies the core risk control objectives set by the company. From the following options, which portfolio construction technique correctly aligns with and effectively manages risk in this context?
A
Quadratic programming allows for risk control through parameter estimation but generally requires many more inputs estimated from market data than other portfolio construction techniques require.
B
The screening technique provides superior risk control by concentrating stocks in selected sectors based on expected alpha.
C
When using the stratification technique, risk control is implemented by overweighting the categories with lower risks and underweighting the categories with higher risks.
D
When using the linear programming technique, risk is controlled by selecting the portfolio with the lowest level of active risk.