One Property of a Risky Portfolio That Combines an Active

question 44

Multiple Choice

One property of a risky portfolio that combines an active portfolio of mispriced securities with a market portfolio is that, when optimized, its squared Sharpe measure increases by the square of the active portfolio's

• A)Sharpe ratio.
• B)information ratio.
• C)alpha.
• D)Treynor measure.

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Definitions:

Rocky Fragments

Pieces or bits of rock material, varying in size from small grains to large boulders, often resulting from the weathering and erosion of larger rock bodies.

Solar System

The Sun, its eight planets, and other celestial bodies that orbit the Sun.

Asteroids

Small rocky bodies orbiting the sun, primarily found in the asteroid belt between Mars and Jupiter.

Gravity

Gravity is a natural phenomenon by which all things with mass or energy—including planets, stars, galaxies, and even light—are brought toward (or gravitate toward) one another.