Which of the following is a property of a returns-based style analysis that differentiates a returns-based from a portfolio-based approach? The returns-based analysis:
　　A. is an ex-post approach that uses regression.
　　B. can pinpoint the source of a manager’s value added and is more forward-looking.
　　C. is an ex-post approach that can pinpoint the source of a manager’s value added.
　　D. uses regression and is more forward-looking.
　　Answer:A
　　The returns-based approach uses regressions on historical data to theoretically decompose both portfolios and indices according to a set of factors that deliver a high coefficient of determination (i.e., R2). The style-based approach is better at pinpointing the source of a manager’s value added and is more forward looking and suited to forecasting future performance.