If a Professionally Managed Portfolio Consistently Outperforms the Market Proxy

question 46

Multiple Choice

If a professionally managed portfolio consistently outperforms the market proxy on a risk-adjusted basis and the market is efficient, it should be concluded that

• A)the CAPM is invalid.
• B)the proxy is inadequate.
• C)either the CAPM is invalid or the proxy is inadequate.
• D)the CAPM is valid and the proxy is adequate.
• E)None of the options

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Definitions:

Cache Memory Levels

Refers to a hierarchy of cache storage that improves data access time by storing frequently used data in quick to access memory layers.

Proximity

The state or condition of being close or near; in technology, it often relates to the detection of and response to nearby objects or signals.

Machine Cycle

The series of steps a central processing unit goes through when it performs a program instruction.

Encode

The process of converting information into a particular form or code to ensure its secure transmission or storage.