Sally's Neighbor Often Brags That His Employer Often Pays Him

question 13

True/False

Sally's neighbor often brags that his employer often pays him in cash "off the books" to save him taxes.Sally is tired of hearing this and contacts the IRS to report the neighbor.If this tip results in taxes collected by the IRS, Sally will likely receive an award of a portion of the tax and penalties collected.

---

Definitions:

Active Portfolio Management

The strategy of making buy and sell decisions of investment portfolio holdings, aiming to outperform certain benchmarks.

Modern Portfolio Theory

An investment theory that proposes optimizing the expected return for a given amount of portfolio risk, or alternatively minimizing risk for a given level of expected return, through diversification.

Markowitz

Harry Markowitz, an economist who developed Modern Portfolio Theory, emphasizing the benefits of diversification.

Excess Returns

Excess returns refer to the amount by which an investment outperforms a benchmark or risk-free rate.