The Modigliani M² Measure and the Treynor T² Measure

question 8

Multiple Choice

The Modigliani M² measure and the Treynor T² measure

• A) are identical.
• B) are nearly identical and will rank portfolios the same way.
• C) are nearly identical, but might rank portfolios differently.
• D) are somewhat different; M² can be used to rank portfolios, but T² cannot.
• E) are somewhat different; T² can be used to rank portfolios, but M² cannot.

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Definitions:

Karma Yoga

A spiritual path in Hinduism emphasizing selfless action performed for the benefit of others as a way to spiritual liberation.

Detachment

Lack of willfulness or emotional concern. Detachment through ascetic denial (or, failing that, aesthetic contemplation) was proposed by the great pessimist Arthur Schopenhauer as a method of responding to the fact that life is filled with frustration due to our incessant irrational desires. Schopenhauer’s answer is similar to that of the ancient philosophy called Stoicism, which also teaches that most of our passions are irrational and are best ignored through the detachment and commitment to reason.

Golden Rule

A moral principle that suggests treating others as one would like to be treated themselves.

Daoism

A philosophical and religious tradition rooted in Chinese culture that emphasizes living in harmony with the Dao, which is the fundamental nature of the universe.