Allison's Portfolio Has a Beta of 1

question 39

Multiple Choice

Allison's portfolio has a beta of 1.5 and earns a return of 15%. Brianna's portfolio has a beta of 1.0 and earns a return of 11%. The risk-free rate is 3%. According to the Treynor measure,

• A) Allison has the better portfolio.
• B) Brianna has the better portfolio.
• C) the portfolio's are equally desirable.
• D) the answer depends on Allison and Brianna's risk tolerance.

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Definitions:

Governs Behaviour

Refers to principles or forces that influence or control actions and conduct.

Environment

The environment or situation where a human, animal, or plant exists or functions.

Personal Motives

Internal drivers that steer individual behavior towards fulfilling personal desires, goals, or needs.

Leta Hollingworth

An influential psychologist known for her work in child development, intelligence testing, and the study of gifted children.