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:

Safety Devices

Equipment or systems designed to prevent accidents, injuries, and harm in workplaces, vehicles, or public spaces by reducing risks and hazards.

High Risk

Situations or investments that carry a significant possibility of loss or failure.

Low Risk

Pertaining to situations or investments that have a minimal likelihood of loss or failure.

Insurance Market

The marketplace where individuals or entities can purchase insurance products to transfer risk from themselves to an insurance provider.