Benchmark riskA) is inevitable and is never a significant issue in practice.B) is inevitable and is always a significant issue in practice.C) cannot be constrained to keep a Treynor-Black portfolio within reasonable weights.D) can be constrained to keep a Treynor-Black portfolio within reasonable weights.

Question

Benchmark riskA)  is inevitable and is never a significant issue in practice.B)  is inevitable and is always a significant issue in practice.C)  cannot be constrained to keep a Treynor-Black portfolio within reasonable weights.D)  can be constrained to keep a Treynor-Black portfolio within reasonable weights.

Vivien Varga · Accepted Answer

Final Answer : D, Explanation :  Benchmark risk can be managed or constrained through various strategies, including the use of a Treynor-Black model, which allows for the optimization of a portfolio by balancing active and passive investments to maintain reasonable weights and manage benchmark risk effectively.

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