If a Market Proxy Portfolio Consistently Beats All Professionally Managed

question 18

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) a and b
• E) b and c

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Definitions:

Bargaining Structure

The set-up and organization of collective bargaining, including the levels at which negotiations occur (e.g., national, industry-wide, or company level) and the participants involved.

Tradeoff

A situation that involves losing one quality or aspect of something in return for gaining another quality or aspect.

Responsiveness

The quality of reacting quickly and positively to changes, inquiries, or requests.

Collective Bargaining Agreements

Legal contracts between employers and workers' unions outlining wages, hours, benefits, and working conditions.