A portfolio manager uses two different proxies for the market portfolio, the S&P 500 index and the MSCI World index. Differences in the manager's portfolio performance resulting from the different market portfolios is referred to as
A)The size effect
B)The market effect
C)Measurement error
D)Benchmark error
E)Manager's performance error

Question

Quizplus · Accepted Answer

The differences in the manager's portfolio performance resulting from the use of different proxies for the market portfolio is referred to as benchmark error.

A Portfolio Manager Uses Two Different Proxies for the Market