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Discuss the Differences Between the Attribute and Behavioral Approaches to Performance

question 67

Essay

Discuss the differences between the attribute and behavioral approaches to performance measurement related to the criteria of (a)strategic congruence,(b)validity,and (c)reliability.


Definitions:

Treynor-Black Model

A portfolio optimization model that blends passive and active management strategies to try to achieve excess returns with an acceptable level of risk.

Alpha Coefficient

A measure of the performance on a risk-adjusted basis of an investment portfolio, indicating excess return over the benchmark.

Beta Coefficient

A measure of the volatility, or systematic risk, of a security or a portfolio compared to the market as a whole.

Nonsystematic Variance

The variability in a security's or a portfolio's returns that is not related to overall market movements.

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