Suppose Two Portfolios Have the Same Average Return and the Same

question 46

Multiple Choice

Suppose two portfolios have the same average return and the same standard deviation of returns, but portfolio A has a lower beta than portfolio B. According to the Treynor 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 are correct.

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Definitions:

Manufacturing Processes

The methods and operations involved in converting raw materials into finished goods.

Regulatory Groups

Organizations or bodies that create and enforce rules and regulations within specific industries.

Financial Instruments

Contracts that give rise to both a financial asset of one entity and a financial liability or equity instrument of another entity.

Interest Rates

The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.