7.

Wei Liu makes two statements about active portfolio management: Statement 1 The "active return" of an actively managed portfolio is the difference

between the portfolio's return and the return on the benchmark portfolio and is equal to the managed portfolio's alpha. Statement 2 The active weights are the differences in the managed portfolio's weights and the benchmark's weights. Are Liu's statements correct?

A.Only Statement 1 is correct.

B.Only Statement 2 is correct.

C.Both statements are correct