Actively Managed Funds Find It Difficult to Consistently Earn Higher

question 36

Multiple Choice

Actively managed funds find it difficult to consistently earn higher risk-adjusted returns than a broad stock market index. The difference in return between actively managed funds and passively managed index funds can be explained by which of the following?
I. Lower expense ratios at index funds
II. Higher turnover ratios at index funds
III. Differences in returns in sectors of the market and the overall market return

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

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Definitions:

Custom of the Sea

A maritime practice which justifies extreme measures for survival at sea, historically including cannibalism.

Duty-Defined Morality

A framework in ethics where the moral status of an action is based on whether it is in accordance with a set of duties and rules, rather than on the consequences of the action.

Utilitarianism

An ethical theory that posits the best action is the one that maximizes utility, usually defined as that which produces the greatest well-being of the greatest number of people.

Virtue Ethics

An ethical theory that emphasizes virtues of mind, character, and sense of honesty as the basis for morality.