Total portfolio management's optimization model has as its payoff the asset-liability mix providing the highest return possible.This return figure is:
A)The maximum amount that can be outlaid for discretionary items.
B)The minimum amount that can be outlaid for discretionary items.
C)The maximum amount that can be outlaid for nondiscretionary items.
D)The minimum amount that can be outlaid for nondiscretionary items.
E)None of the above.

Question

Quizplus · Accepted Answer

The optimization model used in total portfolio management aims to maximize the return of the asset-liability mix, which refers to the combination of assets and liabilities in a portfolio. Therefore, the return figure obtained from the optimization model represents the highest possible return that can be achieved from this mix of assets and liabilities, and it is not directly related to discretionary or nondiscretionary items.

Total Portfolio Management's Optimization Model Has as Its Payoff the Asset-Liability