SIE Understanding Trading, Customer Accounts and Prohibited Activities Question 44: Answer and Explanation

Question: 44

Which of the following statements is NOT true regarding benchmarks and indices?

• A. They are not usually used to measure investment managers' performance.
• B. They allow comparison of a security's return with that of similar securities.
• C. They allow comparison of a security's return with that of investments other than securities.
• D. They allow comparison of a security's return with compensation threshold conditions.

Correct Answer: A

Explanation:

A: Choice A is correct because benchmarks and indices are commonly used to measure effectiveness of an investment manager. Choices B, C, and D are incorrect because they are each true.