The Following Data Are Available Relating to the Performance of Long

question 54

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%. What is the Treynor measure of performance evaluation 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:

Derived Demand

A demand for a product or service that arises from the demand for another product or service. For example, demand for steel is derived from the demand for automobiles.

Decoupling Inventories

Inventories held to separate or buffer different stages of the production process, reducing dependency and potential disruptions.

Anticipated Change

A forecasted or expected modification in conditions, trends, or operations that may impact future performance.

Derived Demand

Demand that is not for the goods or services themselves but results from the demand for another good or service.