Exhibit 25 -Refer to Exhibit 25

question 20

Multiple Choice

Exhibit 25.9
Use the Information Below for the Following Problem(S)
Consider the following information for four portfolios, the market and the risk free rate (RFR) :
$$\begin{array} { l l l l } \text { Partidio } & \text { Return } & \text { Eet. } & \text { ED } \\\hline \text { A1 } & 0.15 & 1.25 & 0.182 \\\text { A2 } & 0.1 & 0.9 & 0.223 \\\text { A3 } & 0.12 & 1.1 & 0.138 \\\text { A4 } & 0.08 & 0.8 & 0.125 \\\text { Market } & 0.11 & 1 & 0.2 \\\text { RFR } & 0.03 & 0 & 0\end{array}$$
-Refer to Exhibit 25.9.Calculate the Jensen alpha Measure for each portfolio.

• A) A1 = 0.014, A2 = -0.002, A3 = 0.002, A4 = -0.02
• B) A1 = 0.002, A2 = -0.02, A3 = 0.002, A4 = -0.014
• C) A1 = 0.02, A2 = -0.002, A3 = 0.002, A4 = -0.014
• D) A1 = 0.02, A2 = -0.002, A3 = 0.02, A4 = -0.14
• E) None of the above

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Definitions:

Independent Variable

A variable presumed to influence or determine the value of another variable, often called the dependent variable.

Coefficient Of Correlation

A statistical measure that calculates the strength and direction of a linear relationship between two quantitative variables, ranging from -1 to 1.

Dependent Variable

In an experiment or statistical model, the variable that is being tested and measured, often influenced by the independent variable(s).

Independent Variable

In an experiment, the variable that is intentionally changed to observe its effect on the dependent variable.