Actively Managed Funds Find It Difficult to Consistently Earn Higher

question 36

Multiple Choice

Actively managed funds find it difficult to consistently earn higher risk-adjusted returns than a broad stock market index. The difference in return between actively managed funds and passively managed index funds can be explained by which of the following?
I. Lower expense ratios at index funds
II. Higher turnover ratios at index funds
III. Differences in returns in sectors of the market and the overall market return

• A)II only
• B)I and III only
• C)I and II only
• D)II and III only
• E)I,II,and III

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Definitions:

Desired Behavior

The specific actions or reactions that an individual or organization seeks to encourage or bring about.

Immediate Reinforcement

The delivery of a reward directly after a desired behavior is performed, enhancing its likelihood of recurrence.

Immediate Reinforcement

The prompt delivery of a reward or punishment following a behavior, which strengthens the likelihood of that behavior occurring again.

Contingent Reinforcement

A reward that is given only after a specific behavior is demonstrated, used to encourage that behavior in the future.