Which of the following statements concerning active equity portfolio management strategies is true?

Question

Quizplus · Accepted Answer

The primary objective of active equity portfolio management is to generate a higher risk-adjusted return than a passive benchmark portfolio. This requires conducting thorough research and analysis to identify mispricings and opportunities to generate alpha. However, this will incur transaction costs, so the net return must be also considered after the costs are deducted. Lower risk or lower turnover are not necessarily characteristics of active portfolio management or determinants of their success. Maximizing trading activity can result in higher costs and lower returns.

Which of the Following Statements Concerning Active Equity Portfolio Management