Benchmark Risk

question 32

Multiple Choice

Benchmark risk

• A) is inevitable and is never a significant issue in practice.
• B) is inevitable and is always a significant issue in practice.
• C) cannot be constrained to keep a Treynor-Black portfolio within reasonable weights.
• D) can be constrained to keep a Treynor-Black portfolio within reasonable weights.

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Definitions:

North American Free Trade Agreement (NAFTA)

A trade agreement between Canada, Mexico, and the United States to reduce trade barriers and increase economic collaboration, replaced by USMCA in 2020.

U.S. and Canada

Refers to the two neighboring countries located in North America, known for their close economic, cultural, and political ties.

Political Risk

The potential loss in value of a foreign investment due to instability and political changes in the host country.

Foreign Investment

Capital investment made by one country into businesses or assets in another country.