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Which of the following is best characterized as a relative risk objective? A. Value at risk for the Fund will not exceed US$3 million. B. The fund will not lose more than €2.5 million in the coming 12-rnonth period. C. The fund will not underperform the DAX by more than 250 basis points.

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Answer:

C. The fund will not underperform the DAX by more than 250 basis points.

Explanation:

A  relative risk objective references a comparison to the performance of another portfolio which is the benchmark.

The fact that there is a reference to DAX makes it a relative risk objective while the statement of maximum allowed absolute loss (€2.5 million) is an absolute risk objective because it does not reference a comparison  but rather is stated in terms of a  fixed number

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