A Temperature Inversion Occurs When

question 3

Multiple Choice

A temperature inversion occurs when

• A) Two warm air layers surround a cold air layer
• B) Two cold air layers overlay a warm air layer
• C) Stable cold air overlays warm air
• D) Stable warm air overlays cold air
• E) Air turbulence causes mixing between air layers

---

Definitions:

Treynor-Black Portfolio

A portfolio optimization model that blends a passive (market index) portfolio and an actively managed portfolio to achieve superior returns.

Sharpe Measure

A ratio used to evaluate the risk-adjusted return of an investment portfolio, by comparing its excess returns to the volatility of those returns.

Active Portfolio Managers

Investment professionals who make regular buy, hold, and sell decisions in an attempt to outperform standard benchmarks.

Active Portfolio

An investment portfolio actively managed by a portfolio manager or investor aiming to outperform a benchmark index through regular buying and selling of securities.