Suppose You Have 5-Year Annual Data on the Excess Returns

question 23

Multiple Choice

Suppose you have 5-year annual data on the excess returns on a fund manager’s portfolio (“fund ABC”) and the excess returns on a market index (where is the return on fund ABC, is the risk-free rate and is the return on the market index) :

-Given the data in question 6, what is the estimated beta ( ) of Fund ABC?

• A) 3.1
• B) 2.1
• C) 1.1
• D) None of the above

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Definitions:

Normal Credit Balance

The usual balance side of an account, considered a credit for liability, revenue, and equity accounts.

Sales Discounts

A reduction from the gross or total price of goods or services offered by the seller to the buyer under certain conditions.

Liquidity

A measure of how quickly and easily assets can be converted into cash without significant loss in value.

Accounts Receivable

Funds that clients owe to a company for products or services delivered on credit.