Benchmark Risk

question 32

Multiple Choice

Benchmark risk

• A) is inevitable and is never a significant issue in practice.
• B) is inevitable and is always a significant issue in practice.
• C) cannot be constrained to keep a Treynor-Black portfolio within reasonable weights.
• D) can be constrained to keep a Treynor-Black portfolio within reasonable weights.

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Definitions:

Negotiability

The quality of a financial instrument that allows it to be transferred or assigned from one party to another in exchange for value.

Sum Certain In Money

A specified, fixed, or exact amount of money that is owed or due to be paid under a contract or agreement.

Enforceable Contract

a valid agreement between parties that can be legally upheld and compelled in a court of law.

Payment

The transfer of money or goods from one party to another as a fulfillment of a transaction or obligation.