There Appears to Be a Role for a Theory of Active

question 35

Multiple Choice

There appears to be a role for a theory of active portfolio management because

• A)some portfolio managers have produced sequences of abnormal returns that are difficult to label as lucky outcomes.
• B)the "noise" in the realized returns is enough to prevent the rejection of the hypothesis that some money managers have outperformed a passive strategy by a statistically small, yet economic, margin.
• C)some anomalies in realized returns have been persistent enough to suggest that portfolio managers who identified these anomalies in a timely fashion could have outperformed a passive strategy over prolonged periods.
• D)some portfolio managers have produced sequences of abnormal returns that are difficult to label as lucky outcomes and the "noise" in the realized returns is enough to prevent the rejection of the hypothesis that some money managers have outperformed a passive strategy by a statistically small, yet economic, margin.
• E)All of the options

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Definitions:

Average Rate

Typically refers to the mean value or norm of a variable rate over a specified period, such as interest rates or exchange rates.

Capital Investment Proposals

Plans or suggestions for allocating resources towards long-term assets in hopes of gaining future returns.

Salvage Value

The approximate remaining value of an asset when it reaches the end of its operational lifespan.

Total Income

The sum of all revenues and gains a company receives before any expenses are deducted.