Suppose Two Portfolios Have the Same Average Return and the Same

question 70

Multiple Choice

Suppose two portfolios have the same average return and 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:

Lorenz Curve

A graphical representation used to illustrate the distribution of income or wealth within a population, indicating inequality.

Equally Distributed

A situation or condition in which resources, wealth, or opportunities are shared evenly amongst all participants or members of a group.

Program

A set of planned activities or instructions designed to achieve a specific outcome, which can be implemented through software in computing or policy in government and organizations.

Lyndon Johnson

The 36th President of the United States, serving from 1963 to 1969, known for his domestic policies like the Great Society and civil rights advancement.