If You Start with the Number 3

question 42

Multiple Choice

If you start with the number 3.0 and move the decimal point one unit to the left, you wind up with 0.30. If you move the decimal point a total of five units to the left, the result is the same as that of dividing the original number by

• A) 10.
• B) 10³.
• C) 10⁴.
• D) 10⁵.

Gain insight into the contribution of selection within markets to total excess return.

Comprehend the method for calculating total excess return on managed portfolios.

Analyze the differences in performance evaluation based on Sharpe, Treynor, and information ratios.

Apply investment performance evaluation measures to real-life mutual funds and market portfolios.

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Definitions:

Future Inflation

Anticipated increase in the price level of goods and services in the future, affecting purchasing power.

Market Risk Premium

The additional return an investor expects from holding a risky market portfolio instead of risk-free assets.

Cost of Equity

The return a company requires to decide if an investment meets capital return requirements, often based on the risk of investing in that company's equity.

Dividend Growth Model

A valuation method that estimates the price of a company's stock based on the dividend growth rate and the expected dividend payments.