What Alternative Portfolio Mirrors the Objectives of a Portfolio Under

question 55

Multiple Choice

What alternative portfolio mirrors the objectives of a portfolio under evaluation?

• A) Market average index
• B) Efficient portfolio
• C) Benchmark portfolio
• D) Performance standard

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Definitions:

Required Rate

Often used in reference to the minimum acceptable return on investment or the minimum discount rate used in net present value calculations.

Internal Rate of Return

A metric used in financial analysis to estimate the profitability of potential investments, calculated as the rate of return that makes the net present value of all cash flows from a particular project equal to zero.

Initial Investment

The amount of money used to start a project, purchase an asset, or initiate operations.

Cash Inflows

Money or funds entering a business from various sources like sales, investments, or financing.