Relationship Between Performance and Expense Ratio - CFA Level 1 Exam Answers

Exploring the Relationship Between Performance and Expense Ratio

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Question

An examination of the relationship between performance and the expense ratio indicated that ________.

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A. B. C. D.

Explanation

An examination of the relationship between performance and the expense ratio indicated that good performance was associated with low expense ratios; in one way, it is because management expense is money not invested in the portfolio of shares and/or bonds. Expense is necessary however when one needs to shift to better performing stocks according to market changes.