Question

If Arnab’s reallocation of investment portfolio between equities, equity options and debt, government bonds reflected the way the markets performed in each of the years, what can be said about the performance of the market during the period 94-95 and 99-00?

• A. The equities market peaked in performance in the year 96-97
• B. The year in which the equities market performed the worst in this period was in 97-98
• C. The performance of debt markets was better than equities market in 2 out of 5 years
• D. In 97-98, both the debt, government bonds and equity, options markets performed equally well

Answer 1

The correct option is D In 97-98, both the debt, government bonds and equity, options markets performed equally well

The total funds allocated to equity options in the year 97-98 is 165+28 = 193. the total funds allocated to debt and government bonds is 134+62= 196. Almost equal amounts of funds have been allocated to both debt and equity, hence both would have performed as well as the other.