Morningstar's RAR method I) is one of the most widely-used performance measures.
II. indicates poor performance by placing up to 5 darts next to the fund's name.
III. computes fund returns adjusted for loads.
IV. computes fund returns adjusted for risk.
V. produces ranking results that are the same as those produced with the Sharpe measure.
A)I, II, and IV
B)I, III, and IV
C)I, IV, and V
D)I, II, IV, and V

Question

Quizplus · Accepted Answer

The Morningstar RAR method computes fund returns adjusted for both loads and risk, making it useful for evaluating performance. It does not indicate poor performance by placing darts next to the fund's name, as stated in option II. Lastly, while the rankings produced by the Sharpe measure may be similar to those produced by the Morningstar RAR method, this is not stated as fact in the question, making option V incorrect.

Morningstar's RAR Method I) Is One of the Most Widely-Used