"Portfolio insurance" refers to a trading strategy in which
A) You insure a portfolio of bonds against default at the aggregate level rather than buying insurance on each separate bond.
B) You insure a portfolio of bonds against default by buying an insurance policy that pays a fixed sum of money if a trigger number of defaults occurs.
C) You look to create a synthetic put on a given portfolio by dynamically trading in the assets in the portfolio.
D) You insure a portfolio of stocks against a fall in their value by buying an insurance policy that pays a fixed sum of money if your portfolio value falls below a trigger level.

Question

Quizplus · Accepted Answer

Portfolio insurance typically involves creating a synthetic put option on a portfolio, which can be achieved by dynamically adjusting the asset mix in response to market movements, rather than through purchasing an actual insurance policy.

"Portfolio Insurance" Refers to a Trading Strategy in Which