Answer :
Answer:
C. Attribution.
Explanation:
The three primary components of performance measurement are typically:
- Performance Calculation (measuring returns)
- Performance Attribution (identifying sources of return)
- Performance Appraisal (evaluating performance against benchmarks)
A detailed explanation of each answer choice is below:
A. Benchmarks: These are standards or reference points that can be used to evaluate or compare items. Benchmarks are used in performance measurement to assess an investment's or portfolio's performance in relation to other portfolios' or an index's standard. Although they are important, they do not constitute one of the three main elements of performance measurement.
B. Analysis: This is looking at data to identify patterns, correlations, and trends. Even though analysis is crucial for performance measurement in order to understand outcomes and make wise decisions, it is not regarded as one of the main elements of performance measurement per se.
C. Attribution: An essential part of measuring performance is this. By attributing the returns to different elements including asset allocation, securities selection, and other investment decisions, attribution analysis assists in identifying the causes of a portfolio's performance. It provides an explanation for a portfolio's performance.
D. Cash flows: The net amount of money coming into and going out of a portfolio is referred to here. Although they have an effect on investment performance, cash flows are not a key element of performance measurement.
