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Benchmark Error |
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Benchmark error Use of an inappropriate proxy for the true market portfolio. Benchmark Error The act of using the wrong benchmark when creating a market portfolio in the capital asset pricing model or a similar model. For example, when calculating a CAPM using European stocks, a benchmark error would involve using the Dow Jones Industrial Average (an American index) as the benchmark. A benchmark error can result in wildly incorrect calculations. Want to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit the webmaster's page for free fun content. |
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