Chapter 19: Performance Evaluation

Question 1

The returns achieved over a certain time period. ______ do not consider the risk of the investment or the returns achieved by similar investments.

Answer 1

Absolute returns

Question 2

Calculated in almost exactly the same way as standard deviation, but instead of using all the deviations from the mean — positive and negative — _______ is calculated using only negative deviations.

Answer 2

Downside deviation

Question 3

Investors prefer investments that have a higher return per unit of risk — investments with a high _____.

Answer 3

Reward-to-risk ratio

Question 4

Returns relative to a suitable benchmark — investors can determine whether they could have made more money in their investments.

Answer 4

Relative returns

Question 5

Reflects how the performance of the investment fund deviates from the performance of its benchmark.

Answer 5

Tracking error

Question 6

Determining how much of performance is the result of a selection of asset classes, sectors, individual securities, and currencies

Answer 6

Performance attribution