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If a firm uses non-discretionary leverage, it must present performance using:
Suggested Answer: B
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12 comments · newest first
LE
Leonora
28 days ago
I'm leaning towards A. Actual returns show the full picture.
CA
Carman
1 month ago
I agree, B is the best choice. Clarity is key!
CA
Carissa
1 month ago
I think it's B. Removing leverage effects makes sense.
ME
Melodie
1 month ago
I agree with Filiberto, B is the way to go!
TH
Therese
2 months ago
Wait, are we sure about B? Sounds off to me.
SE
Sean
2 months ago
C seems too simplistic, right?
LA
Lashandra
2 months ago
I think it’s A, you need to show both for clarity.
FI
Filiberto
2 months ago
Definitely B, it’s all about removing those leverage effects.
CE
Celestina
2 months ago
I feel like the answer might be D, but that seems too straightforward. I recall something about needing to adjust for leverage effects in similar questions.
JO
Johnson
2 months ago
I’m a bit confused about this one. I thought non-discretionary leverage meant we just show actual returns, but now I’m questioning if we need to consider the all-cash basis too.
DE
Deeanna
3 months ago
I remember a practice question that emphasized presenting performance on an all-cash basis to remove leverage effects, so I’m leaning towards option B.
VI
Vivan
3 months ago
I think non-discretionary leverage means we need to focus on the actual returns, but I’m not entirely sure if that’s the only thing we should present.