Kumar Consulting Operates Several Stock Investment Portfolios That Are Used

question 10

Multiple Choice

Kumar Consulting operates several stock investment portfolios that are used by firms for investment of pension plan assets.Last year, one portfolio had a realized return of 12.6 percent and a beta coefficient of 1.15.The average T-bond rate was 7 percent and the realized rate of return on the S&P 500 was 12 percent.What was the portfolio's alpha?

• A) −0.75%
• B) −0.15%
• C) 0%
• D) 0.15%
• E) 0.75%

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Definitions:

Predetermined Overhead Rate

An estimated overhead rate used to allocate manufacturing overhead costs to products or job orders, calculated before the costs are incurred.

Job Cost Sheet

A document that records the costs associated with a specific job or project, detailing direct materials, direct labor, and manufacturing overhead.

Predetermined Overhead Rate

A rate calculated before the period begins, used to allocate manufacturing overhead costs to individual units of production based on a chosen activity basis, such as labor hours or machine hours.

Direct Labor-hour

A metric indicating the man-hours spent on direct labor to produce goods, crucial for calculating production costs and pricing strategies.