CAIA Level 1 Glossary

absolute return products - Answer Absolute return products are investment products viewed as having little or no return correlation with traditional assets, and have investment performance that is often analyzed on an absolute basis rather than relative to the performance of traditional investments. absolute return standard - Answer returns are to be evaluated relative to zero, a fixed rate, or relative to the riskless rate, and therefore independently of performance in equity markets, debt markets, or any other markets. active management - Answer refers to efforts of buying and selling securities in pursuit of superior combinations of risk and return. active return - Answer is the difference between the return of a portfolio and its benchmark that is due to active management. active risk - Answer is that risk that causes a portfolio's return to deviate from the return of a benchmark due to active management. alternative investments - Answer are sometimes viewed as including any investment that is not simply a long position in traditional investments. benchmark - Answer is a performance standard for a portfolio that reflects the preferences of an investor with regard to risk and return. benchmark return - Answer is the return of the bench