The Following Data Are Available Relating to the Performance of Seminole

question 80

Multiple Choice

The following data are available relating to the performance of Seminole Fund and the market portfolio: $\begin{array}{lcc} & \text {Seminole } & \text { Market } \\ &&\text { Portfolio }\\\text { Average return } & 18 \% & 14\% \\\text { Standard deviations of returns } & 30\% & 22\% \\\text { Beta } & 1.4 & 1.0 \\\text { Residual standard deviation } &4.0 \% & 0.0 \%\end{array}$

The risk-free return during the sample period was 6%.
Calculate the M² measure for the Seminole Fund.

• A) 4.0%
• B) 20.0%
• C) 2.86%
• D) 0.8%
• E) 40.0%

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Definitions:

Long-term Capital Gain

Profit from the sale of an asset held for more than a year, typically subject to a lower tax rate.

Mutual Fund Prospectus

A legal document provided by mutual funds to potential investors, detailing the fund's objectives, risks, performance, and expenses.

Front-end Loads

Charges paid by investors at the time of purchasing a mutual fund.

Back-end Loads

Fees paid by investors when selling mutual fund shares, typically decreasing over time the longer the shares are held.