There Appears to Be a Role for a Theory of Active

question 29

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
• E) All of the options are correct.

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Definitions:

Manufacturing Overhead Rate

A calculation used in costing that allocates indirect manufacturing costs to products based on a predetermined factor, such as machine hours or labor costs.

Machine-Hours

A measure of production time that quantifies the number of hours a machine is in operation, used for allocating manufacturing costs related to machinery use.

Manufacturing Departments

Divisions within a manufacturing facility, each specialized in a particular aspect of the production process.

Overhead Rate

The rate at which indirect manufacturing costs are allocated to products or services.