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Answer: Benchmark weights should be verifiable ex ante, and return data should be timely ex post.
## Explanation Option A is correct because: - **Ex ante verifiability**: Benchmark weights should be known and verifiable before the investment period begins, allowing for proper portfolio construction and performance measurement. - **Ex post timeliness**: Return data should be available promptly after the measurement period to enable timely performance evaluation. Option B is incorrect because active portfolios can include securities not in the benchmark (off-benchmark positions) as part of active management strategies. Option C is incorrect because float-adjusted indexes are generally preferred as benchmarks since they reflect the actual investable universe available to portfolio managers, rather than the total market capitalization which includes non-tradable shares.
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Which of the following statements about the use of benchmarks in measuring the value added by active portfolio management is most accurate?
A
Benchmark weights should be verifiable ex ante, and return data should be timely ex post.
B
Securities in the active portfolio should always be a subset of the securities in the benchmark portfolio.
C
Non-float-adjusted indexes are better than float-adjusted indexes for use as benchmarks, as the total value of the securities is considered.
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