A portfolio with 80 percent of its assets in a S&P/TSX Composite Index fund and 20 percent in Treasury bills is most sensitive to:
A) systematic risk.
B) non-systematic risk.
C) interest-rate risk.
D) reinvestment risk.

Question

Quizplus · Accepted Answer

The portfolio is most sensitive to systematic risk because it is heavily invested in a broad market index (S&P/TSX Composite Index), which is affected by market-wide factors. Treasury bills add some diversification, but the large allocation to the equity index means overall portfolio performance is closely tied to the broader market's movements.

A Portfolio with 80 Percent of Its Assets in a S&P/TSX