Which of the following characteristics is least likely to be considered when picking the benchmark index?...

Which of the following characteristics is least likely to be considered when picking the benchmark index?

a. Liquidity framework risk

b. Reinvestment risk

c. Income risk

d. Credit risk

Solutions

Expert Solution

Analyzing each option we understand that

a. Liquidity risk - liquidity risk is the company's ability to liquidate the investment and also to minimize the risk. In benchmark index, the liquidity risk is low. For example, investing in real estate, the liquidity risk can be high because it is difficult to liquidate and at the same time reduce losses.

When compared to all other options we can clearly see that option A is the answer because there isba re investment risk, income risk and credit risk when investing in benchmark index.

jeff jeffy answered 1 year ago

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