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Question:

A portfolio manager is most likely to expect higher returns from allocating a portion of assets to the alternative investments asset class because alternative investments:

A often employ leverage.
Explaination

Adding alternative investments to a traditional portfolio may increase expected returns because (1) some alternative investments are less efficiently priced than traditional assets, providing opportunities for skilled managers; (2) alternative investments may offer a premium for being illiquid; and (3) alternative investments often employ leverage.