Week 9 Flashcards
1
Q
why use geometric avg return
A
the value of the portfolio at the start of each period changes based on the return of previous year
Geometric avg shows actual returns received based on portfolio value in each period
2
Q
purpose of policy portfolio
A
- Specifies the strategic asset allocation to achieve clients required objective long term at an acceptable level of risk
- benchmark to evaluate managers performance
- provide guideline for managers - strategic and tactical
3
Q
Characteristic of good benchmark
A
- unambiguous and transparent (components of weight should be known)
- specified in advance
- low turnover
- unbiased
- regularly priced
4
Q
How are managers being evaluated?
A
