If a Professionally Managed Portfolio Consistently Outperforms the Market Proxy

question 41

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 above

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Definitions:

Ego

A component of the psyche associated with self-perception, self-esteem, and the management of personal identity.

Superego

The component of Freud's psychoanalytic theory acting as the moral compass or conscience within the personality.

Freud

Sigmund Freud, from Austria and a pioneering neurologist, created psychoanalysis as a dialogue-based treatment method for mental health conditions.

Unconscious

Relating to the part of the mind that is inaccessible to conscious thought but that affects behavior and emotions.