In a Particular Year, Razorback Mutual Fund Earned a Return

question 6

Multiple Choice

In a particular year, Razorback Mutual Fund earned a return of 1% by making the following investments in asset classes: $\begin{array}{lcc} & \text { Weight } & \text { Return } \\\hline \text { Bonds } & 20 \% & 5 \%\\\text { Stocks } & 80 \% & 0 \% \\\hline\end{array}$ The return on a bogey portfolio was 2%, calculated from the following information. $\begin{array}{lccc} & \text { Weight } & \text { Return } \\\text { Bonds (Lehman Brother Index) } & 50 \% & 5 \% \\\text { Stocks (S\&P } 500 \text { Index) } & 50 \% & -1 \% \\\hline\end{array}$ The total excess return on the Razorback Fund's managed portfolio was

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Definitions:

Price-searcher Firm

A company that has the ability to set the price for its products because it does not face perfect competition.

Marginal Revenue

The increase in revenue that results from the sale of one additional unit of product.

Profit-maximizing Output

The level of production at which a company achieves the highest possible profit.

Marginal Cost

The rise in overall expenses resulting from the production of an additional unit.