Bad5shah

For a global portfolio, why is a custom benchmark used?

A) A custom benchmark is more suitable for thinly traded international stocks.

B) Published indices are not comparable to the portfolio.

C) Since the custom benchmark is created by the manager, it is more likely to be accepted.

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Custom benchmarks are specified for a global portfolio because universally accepted indices may not be comparable to the portfolio.

Bad5shah

Which one of the following is NOT a consideration while forming a custom global benchmark?

A) A currency hedging component.

B) Specification of the risk measure to be used for performance evaluation.

C) Specification of the industry weights worldwide.

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Custom benchmarks involve a variety of considerations including a currency hedging component (if desired) and an industry weights component (bypassing the country weights).