Assume an FI Holds Three Different Positions

Multiple Choice

Assume an FI holds three different positions.The following DEAR information is available for the positions.Position 1 is a five-year zero-coupon bonds with DEAR of $12 500, position 2 is a CHF spot contract with DEAR of $9500 and the third position are Australian equities with DEAR of $34 500.Which of the following statements is true in relation to these positions?

A) The DEAR of the portfolio can be calculated by simply adding up the individual DEARs.
B) The DEAR of the portfolio can be calculated by simply multiplying the individual DEARs.
C) The DEAR of the portfolio can be calculated by simply adding up the individual DEARs and adjusting the sum by an error factor gamma.
D) None of the listed options are correct.