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AAFM GLO_CWM_LVL_1 Exam - Topic 8 Question 116 Discussion

If an investor's excess return is negative,
B) the required return exceeded the realized return
A) the realized return was less than the return earned by the market
C) the investor constructed a poorly diversified portfolio
D) the investor's portfolio had excessive diversification

AAFM GLO_CWM_LVL_1 Exam - Topic 8 Question 116 Discussion

Actual exam question for AAFM's GLO_CWM_LVL_1 exam
Question #: 116
Topic #: 8
[All GLO_CWM_LVL_1 Questions]

If an investor's excess return is negative,

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Suggested Answer: B

by Anjelica at Apr 12, 2026, 09:03 PM

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Thad
5 days ago
C could be true. Poor diversification hurts.
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Joanna
10 days ago
B makes sense too. Required return is key.
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Leota
15 days ago
I think A is correct. Market returns matter.
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Stevie
20 days ago
Not sure about D), that seems off to me.
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Dorethea
25 days ago
Wait, how can excessive diversification lead to negative returns?
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Chana
1 month ago
C) could be a factor, but not always.
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Thaddeus
3 months ago
I think B) makes sense too.
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Adela
3 months ago
A) is definitely true.
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Tricia
3 months ago
D seems off to me; I thought excessive diversification usually reduces risk. I lean towards A or B, but I'm not completely sure.
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Sena
3 months ago
I recall discussing diversification, but I can't remember if excessive diversification leads to negative excess returns. C seems plausible, but I'm not confident.
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Lindsey
4 months ago
I'm not entirely sure, but I remember something about required returns. Maybe B is the answer since it sounds familiar from practice questions.
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Taryn
4 months ago
I think if the excess return is negative, it might mean the realized return was less than the market return, so A could be right.
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