If an Investor's Excess Return Is Negative

question 1

Multiple Choice

If an investor's excess return is negative,

• A)the realized return was less than the return earned by the market
• B)the required return exceeded the realized return
• C)the investor constructed a poorly diversified portfolio
• D)the investor's portfolio had excessive diversification

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Definitions:

Consumer Spending

The total value of goods and services purchased by households during a specific period, an important component of a country's gross domestic product (GDP).

2001 Recession

A brief economic downturn that occurred in the United States in 2001, marked by a decrease in GDP and triggered by the burst of the dot-com bubble.

Federal Government

The national government of a federated state, which is responsible for certain functions such as defense and monetary policy.

Inflation

The growth rate in the general cost of goods and services, causing a downturn in the power to make purchases.