Suppose Two Portfolios Have the Same Average Return and the Same

question 69

Multiple Choice

Suppose two portfolios have the same average return and the same standard deviation of returns, but Buckeye Fund has a higher beta than Wild Cat Fund. According to the Sharpe measure, the performance of Buckeye Fund

• A) is better than the performance of Wild Cat Fund.
• B) is the same as the performance of Wild Cat Fund.
• C) is poorer than the performance of Wild Cat Fund.
• D) cannot be measured as there are no data on the alpha of the portfolio.

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Definitions:

Triangle Waist Company

A clothing manufacturer in New York City whose factory burned down in 1911, leading to significant reforms in labor laws.

Consequences

Outcomes or effects that result from a previous action or decision, either positive or negative in nature.

Upton Sinclair

An American writer and social activist, famous for his novel "The Jungle" which exposed the harsh conditions of the U.S. meatpacking industry, leading to significant food safety reforms.

The Jungle

A 1906 novel by Upton Sinclair exposing the harsh conditions and exploited lives of immigrants in the United States in Chicago and similar industrialized cities.