DECA Financial Consulting Practice Exam 2025 - Free DECA Financial Consulting Practice Questions and Study Guide

Question: 1 / 400

What is a financial benchmark?

A tool for predicting future expenses

A standard used to measure the performance of an asset or portfolio

A financial benchmark is defined as a standard used to measure the performance of an asset or portfolio. It serves as a point of reference that investors and analysts utilize to evaluate the performance of investments. Benchmarks can take various forms, such as stock indices (like the S&P 500) or specific performance targets that reflect market conditions and asset class characteristics.

By comparing investment performance against a benchmark, investors can assess how well their portfolios are performing relative to the market. This comparison is crucial for making informed decisions about asset allocation, investment strategies, and identifying areas that may require adjustments. Understanding and using benchmarks allows for a clearer picture of investment success and facilitates better financial planning and assessment.

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A method for estimating market volatility

A guideline for setting interest rates

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