Which of the following are required to measure the performance of a diversified stock portfolio?
I. Price changes
II. Dividend payments
III. An appropriate index to use as a benchmark
IV. The risk-free interest rate
A) I, III and IV only
B) I, II and IV only
C) I, II and III only
D) I, II, III and IV

Question

Quizplus · Accepted Answer

To measure the performance of a diversified stock portfolio accurately, it is essential to consider price changes (I) and dividend payments (II) as they directly affect the portfolio's return. Additionally, comparing the portfolio's performance against an appropriate index (III) is crucial for assessing its relative performance. The risk-free interest rate (IV) is not a direct requirement for measuring a stock portfolio's performance, although it might be considered in broader investment strategy and risk assessment contexts.

Which of the Following Are Required to Measure the Performance