Suppose Two Portfolios Have the Same Average Return, the Same

question 78

Multiple Choice

Suppose two portfolios have the same average return, the same standard deviation of returns, but Aggie Fund has a lower beta than Raider Fund.According to the Treynor measure, the performance of Aggie Fund

• A)is better than the performance of Raider Fund.
• B)is the same as the performance of Raider Fund.
• C)is poorer than the performance of Raider Fund.
• D)cannot be measured as there are no data on the alpha of the portfolio.

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Definitions:

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan amount.

Consumes

The act of using up goods or services for personal need, satisfaction, or utility, reducing the quantity available.

Consumption

The employment of goods and services within home environments.

Income

Monetary payment received for work or through investments.