A Portfolio Manager Uses Two Different Proxies for the Market

question 92

Multiple Choice

A portfolio manager uses two different proxies for the market portfolio, the S&P 500 index, and the MSCI World index. Differences in the manager's portfolio performance resulting from the different market portfolios is referred to as

• A) the size effect.
• B) the market effect.
• C) measurement error.
• D) benchmark error.
• E) manager's performance error.

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Definitions:

Depreciation Expense

Breaking down the cost of a hard asset over its life of utility.

Comprehensive Income

A measure of all changes in equity of an enterprise during a period, except those resulting from investments by and distributions to owners.

Depreciation

An accounting method of allocating the cost of a tangible asset over its useful life, representing how much of an asset's value has been used up over time.

CCA Rate

The rate at which a business can claim Capital Cost Allowance, which is depreciation for tax purposes.