According to the Treynor-Black Model, the Weight of a Security

question 47

Multiple Choice

According to the Treynor-Black model, the weight of a security in the active portfolio depends on the ratio of __________ to __________.

• A) the degree of mispricing; the nonsystematic risk of the security
• B) the degree of mispricing; the systematic risk of the security
• C) the market sensitivity of the security; the nonsystematic risk of the security
• D) the nonsystematic risk of the security; the systematic risk of the security
• E) the total return on the security; the nonsystematic risk of the security

---

Definitions:

Differential Sensitivity

The concept that individuals vary in their responsiveness to the same environmental stimuli.

Genes

Units of heredity made up of DNA, responsible for determining the characteristics and traits passed from parents to offspring.

Vulnerable

Exposed to the possibility of being attacked or harmed, either physically or emotionally.

Framingham Heart Study

A long-term, ongoing cardiovascular study on residents of the Framingham, Massachusetts area, initiated in 1948 to investigate the factors and characteristics that contribute to cardiovascular disease.