Consider the Treynor-Black Model

question 33

Multiple Choice

Consider the Treynor-Black model. The alpha of an active portfolio is 1%. The expected return on the market index is 16%. The variance of the return on the market portfolio is 4%. The nonsystematic variance of the active
Portfolio is 1%. The risk-free rate of return is 8%. The beta of the active portfolio is 1.05. The optimal proportion
To invest in the active portfolio is

• A) 48.7%.
• B) 50.0%.
• C) 51.3%.
• D) 100.0%.

Prepare flexible budgets showing variable and fixed costs for different sales volumes.

Understand and compute direct materials price and quantity variances, and interpret them as favorable or unfavorable.

Prepare and understand journal entries for the issuance of direct materials into production.

Compute direct labor rate and efficiency variances, and interpret their implications.

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Definitions:

Absolute Advantage

The ability of a country or entity to produce a good or service more efficiently (using fewer resources) than another country or entity.

Specialization

Refers to the process of focusing resources on specific activities, tasks, or areas of expertise to increase efficiency and productivity.

Free Trade

An economic policy that allows imports and exports between countries without tariffs, quotas, or other restrictions.

Opportunity Cost

The denial of potential enhancements from other possibilities once one choice is made.