Which of the Following Statements About Pension Plan Portfolio Performance

question 10

Multiple Choice

Which of the following statements about pension plan portfolio performance is incorrect?

• A) alpha analysis, which relies on the capital asset pricing model, considers the risk of the portfolio when measuring performance.
• B) peer comparison examines the relative performance of portfolio managers with similar investment objectives.
• C) a portfolio annual return of 12 percent from one investment advisor is not necessarily better than a return of 10 percent from another advisor.
• D) in managing the retiree portfolio, fund managers often use immunization techniques such as alpha analysis to eliminate, or at least significantly reduce, the risk associated with changing interest rates.
• E) pension fund sponsors must evaluate the performance of their portfolio managers periodically as a basis for future asset allocations.

---

Definitions:

Beginning Inventory

The value of all inventory held by a company at the start of an accounting period.

Merchandise Inventory

Goods that a retail or wholesale company intends to sell to customers for a profit, listed as a current asset on the balance sheet.

Current Asset

An asset that is expected to be converted into cash, sold, or consumed within a year or the operating cycle, whichever is longer.

Gross Margin Ratio

A fiscal gauge that assesses the amount of profit remaining from sales once the expenses for producing the goods have been subtracted.