You Are Comparing Three Securities and Discover They All Have

question 35

Multiple Choice

You are comparing three securities and discover they all have identical Treynor ratios. Given this information, which one of the following must be true regarding these three securities?

• A)They have identical betas.
• B)They have the same rates of return.
• C)They earn identical rewards per unit of total risk.
• D)They earn identical rewards per unit of systematic risk.
• E)They have identical Sharpe ratios also.

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Definitions:

Break-Even Point

The point at which total revenues equal total expenses, and the business neither makes a profit nor incurs a loss.

Capital Structure

The composition of a company’s liabilities and equity, detailing how it finances its overall operations and growth.

Bankruptcy Proceeding

The formal legal process initiated after filing for bankruptcy that involves resolving the debtor's financial obligations.

Distribution of Assets

The process of allocating assets among beneficiaries, heirs, or other designated parties, usually following a legal procedure like a will or bankruptcy.