The Average Returns, Standard Deviations and Betas for Three Funds

question 25

Multiple Choice

The average returns, standard deviations and betas for three funds are given below along with data for the S&P 500 index. The risk-free return during the sample period is 6%. You wish to evaluate the three mutual funds using the Jensen measure for performance evaluation. The fund with the highest Jensen measure of performance is ________.

• A)Fund A
• B)Fund B
• C)Fund C
• D)S&P500

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Definitions:

Variable Costs

Costs that vary directly with the level of production or sales, such as materials and labor.

Fixed Costs

Expenses that do not change with the volume of production or sales, such as rent, salaries, and insurance.

Logistics Department

The division in a company that is responsible for the planning, control, and management of the movement and storage of goods.

Variable Costs

Outgoings that vary precisely in accordance with the quantity of production or output.