Which of the Following Statements Concerning Active Equity Portfolio Management

question 13

Multiple Choice

Which of the following statements concerning active equity portfolio management strategies is true?

• A) An actively managed equity portfolio has lower total transaction costs.
• B) The goal of active equity portfolio management is to earn a portfolio return that exceeds the return of a passive benchmark portfolio (net of transaction costs) on a risk-adjusted basis.
• C) An actively managed equity portfolio has lower risk than the passive benchmark.
• D) A key to success for an actively managed equity portfolio is to maximise trading activity.
• E) All of the above.

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Definitions:

Unethical Deception

Involves actions or statements that intentionally mislead or deceive others for personal gain or to avoid negative consequences.

Radical Activists

Individuals or groups who take extreme actions to effect change in pursuit of their political, social, or environmental goals.

Laboratory Experiments

Research methods that involve the manipulation of one or more variables in a controlled environment to observe the effects on behavior.

Confounding Variables

These are variables that the researcher failed to control, or eliminate, damaging the internal validity of an experiment by providing a possible alternative explanation for outcomes.