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:

Conceptualization

The process of defining and clarifying ideas or concepts to make them understandable.

Observational Learning

A learning process where individuals learn new behaviors or information by watching others.

Classical Conditioning

A learning process that pairs a natural stimulus with a response until the stimulus alone produces the response.

Operant Conditioning

Through Operant Conditioning, an individual's behavior is altered by the use of punishments or reinforcements to increase or decrease its frequency.