Median manager benchmarks are not appropriate in all circumstances because the median manager universe encompasses many investment styles. True or False? if false, justify it pls I have the guideline answer but not sure about it.
False, they could be appropriate if there is no other suitable benchmark? not too sure buddy.
Don’t really like the question, but I’m going to say false…median managers generally aren’t appropriate because they fail the benchmark criteria, namely because of lack of investability and can’t be determined ex ante.
false… they fail most of the valid benchmark criteria (sp in advance, investability, unambiguous, etc).
The guideline answer is True. I am not comfortable with “all circumstances” here. If it is not appropriate for all circumstances, why bother even mention in the book?
jinstudy Wrote: ------------------------------------------------------- > The guideline answer is True. > > I am not comfortable with “all circumstances” > here. If it is not appropriate for all > circumstances, why bother even mention in the > book? There are other type of benchmarks too which are not applicable in all circumstances. Hedge funds use these type of benchmarks, so that is why it is worth a mention (even though it is not sometimes applicable in those circumstances).
maybe because they want us to comment on appropriateness for diff investment styles alone. in that case the statement is true. i think it is but natural to first think in terms of benchmark validity and that is why i said false since it is inappropriate from a benchmark validity point of view and not because it encompasses diff styles. overconfidence and recall bias i guess!
I think the answer is TRUE. Because if you agree with the fact that Median Manager Benchmarks are not appropriate in all circumstances then the statement is true.
Answer, I think, it s true. Because of ambiguity - it is not possible to determine the style of the median manager as the identity of the median manager is often unknown.
Manager benchmark is only measurable, that’s it. It fails all the other requirements of a benchmark.
I think it is false if you interpret in a narrow sense ( i.e. ceteris paribus plus choose only managers having a single style , such as small cap value)
Agreed that it’s true, even if the justification is a bit specific. It can be the case that the manager universe is too broad, but it also fails for a variety of other more important reasons, i.e. can’t be specified in advance, ambiguous, etc.