The Following Data Are Available Relating to the Performance of Seminole

question 66

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%.
If you wanted to evaluate the Seminole Fund using the M² measure, what percent of the adjusted portfolio would need to be invested in T-Bills?

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Definitions:

Marginal Returns

Marginal Returns refer to the additional output or benefit received from increasing one unit of a particular input while keeping other inputs constant.

Marginal Cost

The incremental cost associated with the production of an extra unit of a product or service.

Marginal Cost Curve

A curve that displays the additional cost associated with producing one more unit of output, typically showing how marginal cost changes with changes in production volume.

Total Cost Curve

A graph that shows the total cost incurred by a firm in the production of goods or services at different levels of output.