If a Market Proxy Portfolio Consistently Beats All Professionally-Managed Portfolios

question 20

Multiple Choice

If a market proxy portfolio consistently beats all professionally-managed portfolios on a risk-adjusted basis, it may be concluded that

• A) the CAPM is valid.
• B) the market proxy is mean/variance efficient.
• C) the CAPM is invalid.
• D) the CAPM is valid and the market proxy is mean/variance efficient.
• E) the market proxy is mean/variance efficient and the CAPM is invalid.

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Definitions:

Cultural Capital

Social assets not related to finances that enhance social advancement apart from monetary resources, including factors like education, intelligence, manner of speaking, and manner of dress.

Folkways

Norms for routine or casual interaction that guide everyday behaviors in a society.

Mores

Social norms that are widely observed and have great moral significance within a particular society.

Taboos

Social or cultural prohibitions against certain practices, discussions, or expressions deemed unacceptable by a community.