The Information in the Following Table Is to Be Used

question 61

Multiple Choice

The information in the following table is to be used to answer questions
$\begin{array}{|l|c|c|c|c|}\hline \text { Fund } & \text { Standard Deviation } & \text { Beta } & \begin{array}{c}\text { Jensen's } \\\text { Alpha }\end{array} & \mathbf{R}^{\mathbf{2}} \\\hline \text { Fund 1 } & 1.97 & 1.0 & 1.3 & 0.95 \\\hline \text { Fund 2 } & 2.97 & 0.8 & 0.6^{*} & 0.80 \\\hline \text { Fund 3 } & 3.82 & 1.2 & -3.5^{*} & 0.90 \\\hline \text { Fund 4 } & 3.50 & 1.4 & 4.2 & 0.65 \\\hline\end{array}$
-Which fund's returns are best explained by the market's returns?

• A) Fund 1
• B) Fund 2
• C) Fund 3
• D) Fund 4

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Definitions:

Mean

The arithmetic average of a set of numbers, calculated by adding all the numbers together and dividing by the count of those numbers.

Standard Error

A statistic that measures the dispersion of sample means around the population mean, estimating the variability within a data set.

Confidence Interval

Newly defined: A measure indicating the reliability of an estimate, often used to infer about the population parameter from sample data.

Sample

A subset of a population used in statistical analysis to estimate the characteristics of the whole population.