The Following Data Are Available Relating to the Performance of Long

question 43

Multiple Choice

The following data are available relating to the performance of Long Horn Stock Fund and the market portfolio: $$\begin{array} { l c c } & & \text { Market } \\& \text { Long Horn}& \text { Portfolio } \\\text { Average return } & 19 \% & 12 \% \\\text { Standard deviations of returns } & 35 \% & 15 \% \\\text { Beta } & 1.5 & 1.0 \\\text { Residual standard deviation } & 3.0 \% & 0.0 \% \\\end{array}$$ The risk-free return during the sample period was 6%. Calculate the information ratio for Long Horn Stock Fund.

• A) 1.33
• B) 4.00
• C) 8.67
• D) 31.43
• E) 37.14

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Definitions:

Selective Serotonin Reuptake Inhibitors

A class of drugs commonly used to treat depression and anxiety disorders by increasing the levels of serotonin in the brain.

Regression Toward the Mean

A statistical phenomenon that results when unusually large or small measurements tend to be followed by measurements that are closer to the average.

Control Groups

Groups in experimental research that do not receive the experimental treatment and are used as a benchmark to measure how the other tested subjects do.

Placebo Effects

Positive changes in health perceived after taking a treatment with no therapeutic effect, attributed to the individual's belief in the treatment's efficacy.