Question

Which of the following is generally true of in-house versus outsourced management of a short-term investment portfolio?

A) In-house management typically involves lower costs.

B) Outsourced management often results in better control over investment decisions.

C) In-house management is less flexible in adapting to market changes.

D) Outsourced management is usually less transparent in its operations.

Answer 1

In-house management of a short-term investment portfolio typically involves lower costs due to the avoidance of external management fees, while outsourced management may offer more sophisticated strategies but tends to be less transparent and offers less direct control.

Step-by-step explanation:

Which of the following is generally true of in-house versus outsourced management of a short-term investment portfolio? In-house management typically involves lower costs. This can be attributed to the fact that having an in-house team mitigates the need for paying an external manager, which generally comes at a premium. Conversely, outsourced management can potentially offer better expertise and access to sophisticated investment strategies due to the specialization of external managers. However, outsourced management may result in less direct control over investment decisions by the company outsourcing the service and is typically less transparent in its day-to-day operations.