The performance measurement of stock portfolio managers must recognize the risk inherent in the investment portfolio.One way to incorporate risk into performance measurement is to examine the portfolio's alpha, which measures the vertical distance of the portfolio's return above or below the Security Market Line.

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Quizplus · Accepted Answer

This statement is true; incorporating risk into performance measurement through examining alpha is a common practice in portfolio management.

The Performance Measurement of Stock Portfolio Managers Must Recognize the Risk