CFA CFA Level 3 Question of the Week: Level 3 – Fixed Income

Question of the Week: Level 3 – Fixed Income

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  • MarkMeldrum
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    Adding inflation-linked bonds to a diversified portfolio of bonds and equities is most likely to result in:

    • A. superior risk-adjusted real portfolio returns.
    • B. superior risk-adjusted nominal portfolio returns.
    • C. superior risk-adjusted nominal portfolio returns but inferior
      risk-adjusted real portfolio returns.
    yash0303
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    Good Quesiton.

    MarkMeldrum
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    The correct answer is Option A. 

    This improvement occurs because inflation-linked bonds can effectively represent a separate asset class, as they offer returns that differ from other asset classes and add to market completeness, inflation-linked bonds offer a constant real return.

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