In Measuring the Comparative Performance of Different Fund Managers, the Preferred

question 39

Multiple Choice

In measuring the comparative performance of different fund managers, the preferred method of calculating rate of return is

• A) internal rate of return.
• B) arithmetic average.
• C) dollar weighted.
• D) time weighted.
• E) None of the options are correct.

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Definitions:

Adjusting Entry

Journal entries made in accounting records at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred.

Overstatement

The act of presenting financial statements or data to be more significant than they actually are, often involving higher revenues, assets, or lower expenses than exist in reality.

Note Payable

A financial obligation represented by a written promissory note which the borrower agrees to pay back to the lender.

Interest Expense

The cost incurred by an entity for borrowed funds, typically reported on the income statement as a non-operating expense.