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:

DSM-5

The Diagnostic and Statistical Manual of Mental Disorders, 5th Edition, a comprehensive classification and diagnostic tool for mental disorders used by professionals in psychiatry, psychology, and healthcare.

Personality Dimensions

Fundamental traits or aspects that constitute human personality, often identified in psychology as openness, conscientiousness, extraversion, agreeableness, and neuroticism (OCEAN).

Normal Variation

The range of differences in behavior, trait expressions, or physical characteristics present in a population without indicating a disorder.

Abnormal Variation

A deviation from the common or expected pattern, often used in the context of psychological or physiological conditions that differ significantly from the norm.