Morningstar's RAR MethodI) Is One of the Most Widely-Used Performance

question 28

Multiple Choice

Morningstar's RAR methodI) is one of the most widely-used performance measures.II) indicates poor performance by placing up to 5 darts next to the fund's name.III) computes fund returns adjusted for loads.IV) computes fund returns adjusted for risk.V) produces ranking results that are the same as those produced with the Sharpe measure.

• A) I, II, and IV
• B) I, III, and IV
• C) I, IV, and V
• D) I, II, IV, and V
• E) I, II, III, IV, and V

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Definitions:

Invisible Hand

A metaphor coined by Adam Smith to describe the self-regulating nature of the market, where individuals pursuing their own interests inadvertently benefit society as a whole.

Competitive Market

A market structure characterized by a large number of buyers and sellers where no single party can dictate the market price of goods or services.

Producer Surplus

The difference between what producers are willing to accept for a good or service versus what they actually receive, often a measure of producer wellbeing.