You Are Comparing Three Securities and Discover They All Have

question 35

Multiple Choice

You are comparing three securities and discover they all have identical Treynor ratios. Given this information, which one of the following must be true regarding these three securities?

• A)They have identical betas.
• B)They have the same rates of return.
• C)They earn identical rewards per unit of total risk.
• D)They earn identical rewards per unit of systematic risk.
• E)They have identical Sharpe ratios also.

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Definitions:

Amortization Expense

The method of slowly expensing the original cost of a non-physical asset throughout its lifetime of use.

Organization Costs

Expenses related to the formation of a corporation, partnership, or other entity.

Accounting Fees

Charges for services provided by accountants or accounting firms related to financial reporting, tax preparation, and audit services.