Suppose the Risk-Free Return Is 3

question 29

Multiple Choice

Suppose the risk-free return is 3%. The beta of a managed portfolio is 1.75, the alpha is 0%, and the average return is 16%. Based on Jensen's measure of portfolio performance, you would calculate the return on the market portfolio as

• A) 12.3%.
• B) 10.4%.
• C) 15.1%.
• D) 16.7%.

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Definitions:

REM Sleep

A stage of sleep characterized by rapid eye movements, more dreaming, and bodily movement; considered important for emotional regulation and memory consolidation.

Mammals

Warm-blooded vertebrate animals characterized by the presence of mammary glands, which females use to feed their young.

Chronic Sleep Deprivation

A condition characterized by consistently not achieving enough sleep, leading to significant negative health and cognitive effects.

Stress Hormone

Biochemical substances, such as cortisol, released into the body in response to stress, affecting various bodily functions.