Suppose Two Portfolios Have the Same Average Return and the Same

question 12

Multiple Choice

Suppose two portfolios have the same average return and the same standard deviation of returns, but portfolio A has a higher beta than portfolio B. According to the Treynor measure, the performance of portfolio A

• A) is better than the performance of portfolio B.
• B) is the same as the performance of portfolio B.
• C) is poorer than the performance of portfolio B.
• D) cannot be measured as there are no data on the alpha of the portfolio.
• E) None of the options are correct.

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Definitions:

Schema Change

The modification or updating of cognitive frameworks or mental structures that are used to organize information, usually in response to new information or experiences.

Performance Pressure

The stress experienced by individuals when they are expected to perform well in any given activity, particularly in front of others.

Increased Levels of Anxiety

Refers to a heightened state of worry, nervousness, or unease, typically about imminent events or something with an uncertain outcome.