You Are Comparing Three Assets Which Have Differing Treynor Ratios

question 21

Multiple Choice

You are comparing three assets which have differing Treynor ratios. Given this, which one of the following must be true?

• A)The assets may all be correctly priced if they have differing betas.
• B)The assets have differing rates of return.
• C)The assets have differing levels of market risk but equal amounts of total risk.
• D)The assets are all mispriced according to CAPM.
• E)The preferred investment is the asset with the highest Treynor ratio.

---

Definitions:

Dislike

A feeling of disapproval or antipathy towards something or someone, marking a negative reaction or attitude.

Admiration And Respect

Feelings of high regard and esteem towards someone, often due to their achievements, qualities, or abilities.

Foot-In-The-Door Phenomenon

A compliance tactic that involves getting a person to agree to a small request to increase the likelihood of agreeing to a larger request later.

Beliefs

The conviction or acceptance that something exists or is true, especially one without proof.