Which of the Following Is True Regarding M2? It Produces

question 58

Multiple Choice

Which of the following is true regarding M2? It produces a measure of portfolio performance that:

• A) is adjusted for systematic risk.
• B) can be compared directly to the risk-free rate.
• C) can be compared directly with the market return.
• D) indicates what would be possible if the portfolio was fully leveraged.

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Definitions:

Accrued Interest

Accrued Interest is the interest that has accumulated on a loan or bond since the last interest payment was made but has not yet been paid out.

Straight-Line Method

An accounting method of depreciation where a fixed amount is charged annually over the useful life of the asset.