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Suzanne Melby, a newly hired analyst for Taylor Capital Advisors, is making a presentation to Taylor’s investment committee about the practical concerns when adding new asset classes to an investment portfolio. In her presentation, Melby makes two statements:
| Statement 1: |
We have seen from the previous charts that adding international securities can increase the returns of a portfolio; however, from the investor’s standpoint, risk may be perceived as higher due to the inclusion of currency, political, and legal risk.
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| Statement 2: |
The investment committee has decided that some type of alternative investment such as hedge funds should be included in all client portfolios, but the large amounts of capital required and the difficulty of finding information may prevent us from investing in alternative investments in some client portfolios. |
With regard to Melby’s statements, the Taylor Capital Advisors investment committee should:
A. agree with both Statement 1 and Statement 2.
B. agree with Statement 1, but disagree with Statement 2.
C. disagree with Statement 1, but agree with Statement 2.
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