A Portfolio Manager Uses Two Different Proxies for the Market

question 88

Multiple Choice

A portfolio manager uses two different proxies for the market portfolio, the S&P 500 index and the MSCI World index. Differences in the manager's portfolio performance resulting from the different market portfolios is referred to as

• A)The size effect
• B)The market effect
• C)Measurement error
• D)Benchmark error
• E)Manager's performance error

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Definitions:

Income Statement

A report detailing a business's income, expenditures, and profit for a certain timeframe.

Gross Profit

Revenue from sales minus the cost of goods sold before administrative, financial, and other operating expenses are deducted.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities, indicating the ownership value.

Income From Operations

The profit realized from a business's operational activities, calculated before taxes and interest charges.