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CFA Level 2
Portfolio Management

Effective Market Risk Hedging for Equities

Very Easy Risk Management Applications Managing Market Risk

A portfolio manager is evaluating methods to manage market risk in her investment portfolio, which consists primarily of equities. She aims to reduce potential losses without severely sacrificing potential gains. The manager is considering different hedging strategies to control exposure to market movements.

Which of the following strategies would likely provide the most effective hedging against market downturns for her equity portfolio?

Hint

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