The Information in the Following Table Is to Be Used

question 46

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 has the most total risk?

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

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Definitions:

Monopoly

A market structure characterized by a single seller dominating the market, often resulting in limited competition and higher prices for consumers.

Patent

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A legal provision that allows only the holder to perform a specific activity or use a particular property.