Canadian Securities Course (CSC) Level 2 Practice Exam

What term is used for the actual historical returns that compare actual results against participated and market benchmarks?

1. Ex-ante

2. Expected return

3. Rate of return

4. Ex-post

The correct answer is: Ex-post

The term that refers to actual historical returns, allowing for a comparison of real results against both the performance of invested assets and market benchmarks, is "ex-post." This term is derived from Latin, meaning "after the fact," and it specifically pertains to analyses and returns that are calculated based on completed data. In investment analysis, ex-post measures are critical as they reflect the actual performance of an investment over a specific period. This allows investors to evaluate how well their investments performed relative to predetermined benchmarks or market indices. Analyzing historical returns enables investors to identify trends, understand risks, and make more informed future investment decisions. The other terms listed have different applications. For instance, expected return pertains to projections based on historical data and assumptions about future performance rather than reflecting actual occurrences. Similarly, ex-ante refers to predictions or forecasts made before an investment is executed. Rate of return can be a broader term that might include both ex-ante and ex-post returns, but it does not specifically emphasize the historical nature of the returns used for comparison.