Suppose Two Portfolios Have the Same Average Return, the Same

question 26

Multiple Choice

Suppose two portfolios have the same average return, the same standard deviation of returns, but portfolio A has a higher beta than portfolio B.According to the Sharpe measure, the performance of portfolio A

• A)is better than the performance of portfolio B.
• B)is the same as the performance of portfolio B.
• C)is poorer than the performance of portfolio B.
• D)cannot be measured as there are no data on the alpha of the portfolio.
• E)None of the options

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Definitions:

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price level in a given period.

Equilibrium Price

The cost at which the amount of products offered matches the amount of products requested.

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a given price over a certain period of time.

Nonbinding

Describes a regulation or condition that does not restrict the actions or choices of the individuals or entities it applies to.