The Information in the Following Table Is to Be Used

question 42

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 of the funds has the most market risk?

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

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Definitions:

Concept

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Metaphor

A figure of speech in which a word or phrase is applied to an object or action to which it is not literally applicable, suggesting a resemblance or analogy.

Nonliteral

Not adhering strictly to the literal or exact meaning of words; figurative.

Concept

Refers to an abstract idea or a mental symbol that is typically a fundamental building block of human thinking and communication.