Benchmark error(redirected from Benchmark Errors)
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
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.
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