Explain the Concept of a Benchmark and Why Benchmarks Provide

question 27

Essay

Explain the concept of a benchmark and why benchmarks provide value when evaluating the performance of a security or portfolio.

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Definitions:

Unilateral Contract

A contract in which only one party makes a promise or undertakes a performance without requiring a reciprocal agreement from the other party, often associated with reward scenarios.

Oral Contract

An oral contract is an agreement between parties that is made verbally without written documentation but is still legally binding.

Counteroffer

A response to an original offer, modifying its terms, which effectively rejects the original offer and puts forward a new one for consideration.

Illusory Promise

A statement that appears to form a legally binding contract but, upon closer examination, lacks the firm commitment necessary to be enforceable.