The Treynor-Black Model Assumes That

question 33

Multiple Choice

The Treynor-Black model assumes that

• A)the objective of security analysis is to form an active portfolio of a limited number of mispriced securities.
• B)the cost of less than full diversification comes from the nonsystematic risk of the mispriced stock.
• C)the optimal weight of a mispriced security in the active portfolio is a function of the degree of mispricing, the market sensitivity of the security, and its degree of nonsystematic risk.
• D)All of the options are correct.

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Definitions:

Personality

The relatively stable set of psychological characteristics that influences the way an individual interacts with his or her environment.

Stress Reaction

A response or change in the body or mind when presented with stressors, affecting an individual's health and wellbeing.

Reaction Formation

A psychological defense mechanism whereby an individual unconsciously replaces an unacceptable or anxiety-inducing emotion or desire with its opposite.

Frustration Quotient

A term that may be used to measure the level of frustration experienced by individuals in certain situations, but it is not a widely recognized or standardized metric in psychology or organizational behavior. NO.