The cost of portfolio insurance is the return foregone if the market moves up.

Question

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The cost of portfolio insurance is typically the premium paid for the insurance product, but it can also be measured as the return foregone if the market moves up and the insurance becomes unnecessary. This is because the premium paid for insurance is effectively a cost, and if the market performs well, the premium paid may result in a lower overall return compared to not purchasing insurance.

The Cost of Portfolio Insurance Is the Return Foregone If