The Black-Litterman model and Treynor-Black model are
A) nice in theory but practically useless in modern portfolio management.
B) complementary tools that should be used in portfolio management.
C) contradictory models that cannot be used together. Therefore, portfolio managers must choose which one suits their needs.
D) not useful due to their complexity.
E) None of the options are correct.

Question

Quizplus · Accepted Answer

The Black-Litterman model and Treynor-Black model are indeed complementary tools in portfolio management. The Black-Litterman model helps in generating expected returns based on a combination of market equilibrium and subjective views, while the Treynor-Black model is used for portfolio optimization by combining active and passive portfolio strategies. Together, they can provide a more robust framework for portfolio management.

The Black-Litterman Model and Treynor-Black Model Are