Which of the Following Statements About Pension Plan Portfolio Performance

question 4

Multiple Choice

Which of the following statements about pension plan portfolio performance is incorrect?

• A) Pension fund sponsors must evaluate the performance of their portfolio managers periodically as a basis for future asset allocations.
• B) Alpha analysis, which relies on the Capital Asset Pricing Model, considers the risk of the portfolio when measuring performance.
• C) Peer comparison examines the relative performance of portfolio managers with similar investment objectives.
• D) A portfolio annual return of 12 percent from one investment advisor is not necessarily better than a return of 10 percent from another advisor.
• E) In managing the retiree portfolio, fund managers often use immunization techniques such as alpha analysis to eliminate, or at least significantly reduce, the risk associated with changing interest rates.

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Definitions:

Personality Development

The process by which an individual's distinctive patterns of thought, emotion, and behavior evolve over the course of their life.

Biological Determinants

Factors rooted in biology that influence individual differences in behavior, health, and other traits.

Personal Desires

Individual's inner wishes or aspirations that motivate behavior towards achieving personal goals.

Submissive

A personality trait or behavior characterized by a willingness to conform to the authority or will of others.