1
Q
What does “Specified in advance” mean?
A
The benchmark is defined before the evaluation period starts.
2
Q
Appropriate” means…
A
The benchmark is consistent with the manager’s style/mandate.
3
Q
Measurable means…
A
You can compute benchmark returns frequently and on time
4
Q
“Unambiguous” means…
A
The benchmark’s constituents and weights are clearly known.
5
Q
“Reflective of current investment opinions” means…
A
The manager understands—and could form views on—the benchmark’s securities/factors; no obscure assets.
6
Q
“Accountable” means…
A
The manager accepts responsibility to be judged against the benchmark.
7
Q
“Investable” means…
A
A passive exposure to the benchmark is feasible at low cost.
8
Q
Selecting a benchmark
A
- Rules-based: Criteria for inclusion and rebalancing.
- Transparent : Disclosure of rules and constituents.
- Investable : Performance can be replicated in the market.
9
Q
Qualities of Benchmark
A
- Unambiguous
- Measurable
- Investible
CFA Level III
flashcards
Decks in class (31)
# Cards
-
Trade Strategy Implementation8
-
Delta Hedging8
-
Investment objective of Option strategy8
-
Durations9
-
Types of Option Strategies27
-
Benchmark for Trade execution - Trading strategy3
-
Wealth Management Terminology5
-
Building Blocks of Portfolio Construction1
-
Performance measure11
-
Payoff Structure for Derivatives6
-
Execution Algorithms12
-
Yield Curve & Business cycle stages9
-
Institutional Investors4
-
Sovereign Wealth Funds5
-
Market Manipulation Tactics9
-
Benchmark quality9
-
Types of benchmarks12
-
Derivatives - Strategies, Skewness and Volatility9
-
Measuring Volatility skew4
-
Strategy selection For Derivatives7
-
Portfolio Rebalancing22
-
Spreads and Economy18
-
Asset Class Specification4
-
Benchmark Segmentation12
-
Biases and Traps6
-
Effective Governance Models Elements13
-
Risk Attribution6
-
NDF12
-
EM risk of high currency inflow2
-
Portfolio construction - Active share and Active risk5
-
Structured Credit (CDO's)5
