A:

The BEST definition of a benchmark portfolio is:
a) A preset list of securities to be used to compare the performance of an actual portfolio



b) A model portfolio with the same asset allocation percentages of the actual portfolio



c) The portfolio that the IA must attempt to outperform with an actual portfolio



d) An index such as the Standard & Poor's 500





The correct answer is "a." While all of the choices could be considered definitions of a benchmark portfolio, the best definition is the specific list of securities that will be compared with the performance of the actual portfolio.



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