Based on Jensen's Measure, Superior Portfolio Performance Is Exhibited by A

question 12

Multiple Choice

Based on Jensen's measure, superior portfolio performance is exhibited by a:

• A) statistically significant positive alpha.
• B) statistically significant negative alpha.
• C) zero alpha.
• D) low positive alpha.

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Definitions:

Absorption Costing

In this method of accounting, the price of manufacturing a product is calculated by summing the costs of direct materials, direct labor, and all manufacturing overheads, variable and fixed alike.

Fixed Manufacturing Overhead

The total of all costs related to manufacturing that do not change with the level of production, such as salaries of managers and rent of the factory.

Divisional Segment Margin

The profit margin for a specific division or segment of a company, calculated by subtracting direct and allocated expenses from segment revenues.

Net Operating Income

A measure of a company's profitability from its regular business operations, excluding non-operating income and expenses.