Assume That as a Portfolio Manager the Beta of Your

question 22

Multiple Choice

Assume that as a portfolio manager the beta of your portfolio is 1.4 and that your performance is exactly on target with the SML data under condition 1.If the true SML data is given by condition 2,how much does your performance differ from the true SML?
$\begin{array}{c}\begin{array}{lll}(1) \\(2) \end{array}\begin{array}{lll}\mathrm{RFR}=.06 \\\mathrm{R}_{\mathrm{K}}=.05\end{array}\begin{array}{lll}\mathrm{R}_{\mathrm{m}}(\mathrm{proxy}) =.12 \\\left.\mathrm{R}_{\mathrm{m}} \text { (true }\right) =.11\end{array}\end{array}$

• A) 2.0% lower
• B) 0.5% lower
• C) 0.5 % lower
• D) 1.0% higher
• E) 2.0% higher

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Definitions:

Glial Cells

are non-neuronal cells in the central and peripheral nervous systems that support and protect neurons.

Memory Storage

The process by which information is encoded, stored, and retrieved in the brain, making it available for later use.

Retrograde Amnesia

A loss of memory-access to events that occurred or information that was learned before an injury or the onset of a disease.

Right Temporal Lobe

A region of the brain involved in processing auditory information and is also associated with the comprehension of language and the formation of memories.